How is the interest worked out on a credit card?

cyberkidkiller

Hi I have a Halifax Platinum card which I have been using for some time. I have always been happy with the card until last month. I have always paid of the full balance in full until last month where I was a bit short and paid off the balance bar £200. With my bill the following month I noticed I got changed the full interest for the £2000, which was on my balance, the previous month and I had paid it off all bar £200 by the due date. I phoned Halifax and managed to get the interest refunded but they tell me that all credit cards are like this is this true??

fatboyonadiet

No, you should have only been charged interest on the £200 remaining

davidcampbell

no thats wrong fatboy. if balance is not cleared in full interest in charged on entire debt.

Nearly’ paying off in full is impossible.

Repay credit cards in full at the end of the month and (with a few exceptions) no interest is charged. However pay most, but not all, of it off, and interest is charged on the whole debt.



An example will clarify. Spend £500 and then repay £450 and you pay a month’s interest on the entire £500 debt, not just the remaining £50! It’s always worth trying to scrape the extra cash to pay off in full.

DC

Caped_Avenger

davidcampbell wrote:

no thats wrong fatboy. if balance is not cleared in full interest in charged on entire debt.

Is the right answer.

Xbigman

Its worse than that. Some CC companies will go back 56 days and charge you interest, thats 8 weeks. IE nearly double.
Regards



X

Caped_Avenger

Yeah, but that's all down to when the purchase was made. If the purchase was made the day after your January statement was produced, therefore shows on your February statement, due to be paid in March, and you don't pay that purchase off, you'll pay interest from the day of purchase.

Rafter

Yup - you will probably get a nasty shock next month too since any purchases you have made since your last statement will also be charged interest from the date of purchase.

A way to avoid this is to pay your bill now based on the purchases you know you have made and before the statement is issued. You should then be back in the clear and can use the interest free days again going forward.

Always worth having a second card in reserve if this happens again so you can make purchases on the second card until the next month, while you clear the one with a balance.

R.

cyberkidkiller

cheers for the help, looks like I better pay it all off next time

fatboyonadiet

WOW, knew CC were a big con but wasn't aware of that one, good job I pay mine off every month!


Could think about MSE is that if you're ever wrong someone will be along shortly to straighten you out!