Credit Card Interest free period cancelled

twojoes

Hi,
I usually pay my CC bill off every month, but last month I made a mistake by paying the previous month's amount instead. This oversight meant I underpaid by £175, but it also landed me with £20 in interest payments which I thought rather high on £175.
But It appears that any underpayment results in the interest free period being cancelled on ALL transactions in that month, so in theory underpaying by 1p or £1000 results in the same interest charge.
I always assumed that the 45 days interest free period meant exactly that for each transaction and therefore only expected to be charged on the transactions not paid for - eg. The last £175 worth from the month.

Is this a known gotcha in credit card agreements, or am I being ripped off?

Thanks for any info.

Joe

prowla

You don't pay interest if you settle your account in full.

Moggles_2

Welcome to MSE!

If you normally use your credit card solely for purchases and settle your statement balance in full by the payment due date, you are not charged interest.

Having accidentally made a partial payment this month, interest will accrue on a daily basis from the date of your last statement to the day funds are credited to your account.

There will be some residual interest to pay next month. If you were to settle the statemented balance in full for two consecutive months, you would have x days interest-free on purchases. once again.

Lenders' interest calculations differ, but the above is broadly true of all credit cards. May I ask which card is involved?

nomoneytoday

It's correct. The only way to restore the Interest free debt is to pay off the entire balance for 2 consecutive months