Paid balance in full but still owe interest?

HurdyGurdy

I paid the full outstanding balance of my credit card last month (over £4k). The payment was due on 30th of the month, the payment was credited on 20th of the month.

So how do I owe £18.23 in interest? I don't usually pay the full balance off, so I've not come across this before. Does this mean that I'll still owe interest on the £18.23 I've just paid? Does it end up so that you can actually NEVER really pay the card off because there's always going to be interest accruing?

Confused!

YorkshireBoy

The £18.23 is 'trailing', or 'residual', interest and is the amount of interest accrued between your last statement date and the 20th when the payment credited the account.

You need to pay two consecutive statements in full and by their respective payment due dates to stop it.

milliemonster

You will still owe interest due on the amount outstanding from the date of your previous payment to the date you paid the £4k if that makes sense, your best bet now would be to phone the credit card provider and ask them the amount you need to pay now to clear any residual interest that will be accruing on the £18.23

McKneff

The interest will have been accrued between them generating the statement and you receiving it in the post and then waiting to pay for it.

Best thing to do is pay it as soon as you get the bill, there will still be a bit of interest but again pay it straight away the following month.

Either that or when you get your first bill, overpay it by a few quid and interest will only be a few pence, but yes, in theory you are correct about never really pay the card off (within reason) Silly isnt it.

It happened to me and i think i ended up down to about 20p and i rang them up to tell them it was silly and they just wrote it off.

p00hsticks

milliemonster wrote: »

You will still owe interest due on the amount outstanding from the date of your previous payment to the date you paid the £4k if that makes sense, your best bet now would be to phone the credit card provider and ask them the amount you need to pay now to clear any residual interest that will be accruing on the £18.23

My understanding is that they are not allowed to charge interest on the interest. If the OP pays the £18.23 (which you correctly say is the interest run up between the statement date and when the OP paid off the statement balance figure) in full by the payment date then there should be a zero balance the following month.

CLAPTON

keep it simple

if you pay in full for two consecutive months then there is no further interest.

Nebema

If you want to pay off the full amount, give the card company a call the day you intend to pay and ask them for the full outstanding amount and make it clear that you intend to pay that amount to clear your balance. Ask them for confirmation that you will have a nil balance when you have paid that amount. 99% of calls are recorded nowadays so if they then attempt to charge you more interest the following month they cannot enforce it.

CLAPTON

Nebema wrote: »

If you want to pay off the full amount, give the card company a call the day you intend to pay and ask them for the full outstanding amount and make it clear that you intend to pay that amount to clear your balance. Ask them for confirmation that you will have a nil balance when you have paid that amount. 99% of calls are recorded nowadays so if they then attempt to charge you more interest the following month they cannot enforce it.

this won't work

the call centre people won't be able to give a full balance that clears the trailing interest.

the rules is very very simple
pay in full for two consecutive months then no more interest

nick88

p00hsticks wrote: »

My understanding is that they are not allowed to charge interest on the interest. If the OP pays the £18.23 (which you correctly say is the interest run up between the statement date and when the OP paid off the statement balance figure) in full by the payment date then there should be a zero balance the following month.

They can and do charge interest on interest - this is known as compound interest. Once you pay off the £18.23, you'd have paid off the bill in full, and wouldn't have any additional charges.

The reason for the £18.23 was because two statements ago (the one before the £4k), the entire bill was not paid. As a result, interest from the entire balance of this bill would accur daily. Whilst you paid off the amount in total the next month, you still would have had to pay the interest on the earlier bill (the one before the £4k) from the date of the 4k statement to the date you actually paid it off.