What is the normal interest rate rules for most cards?

puffedout

I am interested to know what the normal practice is by credit card companies to charge interest on credit cards. I am someone who always pays my cards off in full each month so have never really had an issue relating to this before. However with one of my cards which I use alot for work and personal use due to airmiles being collected I recently experienced what I felt was a crazy set of terms.

I decided on my previous statement to not pay the full amount off as I had a large amount of company expenses that were still due to be paid and I decided to leave a very small balance (in comparison to the total balance on the statement) on the card. I knew I would incur some interest charges but rationalised this with balancing everything else.

I found that the interest I was charged was not on the balance left after I paid a large chunk off before the due date but actually on the day rate of amount on my statement up until the day I paid minus the balance that remained.

I was wondering how many other companies do this as this card company seem to believe it was the norm for all card companies to charge in this way. In years gone by I have always found that you paid interest on the balance left after a payment had been made, not on the amount that you have paid and then leave a balance at the end of the month.

On the overall scheme of things it is not alot of money and as I have always paid off my card I suppose over the years I can say that is fine. However I am not sure I would like to stick with the credit card company even though I get airmiles from them!!

Thanks in advance.

jonesMUFCforever

Yep thats how it works with most cards - if you don't pay in full you get charged interest on the whole balance + you don't get any free interest period on any purchases this month.
Your statement will need to be fully cleared for 2 successive months for the interest to stop.

Tixy

All cards work this way. Most cards give you up to 56 days interest free if you pay in full as a special deal. What this means in practice is that if you pay off in full each month you pay no interest.
If you don't pay in full you are charged interest from the day you buy to the day you make that months payment and subsequently on any balance remaining after the monthly payment until its paid in full. You'll also be charged some trailing interest next month.

CLAPTON

all cards charge interest on the daily balance; however if you pay in full each and every month the interest is waived.

so even if you leave a little as a £1 then you will be charged interest from the time you spent to the time you paid.
Also there will be additional interest in the month after full payment which is the interest between the statement date and the date you actually paid ...(often called trailing interest)

you need to pay in full for 2 consecutive months before interest stops.