Paying off credit card - Interest

Yorkshire.Lass

So i finally saved enough to pay off 90% of my Master Card with TSB, but i'm hesitant...will they sting me for the interest they would get over the coming months/years (centuries) or not?

I'm really not sure how this works. Thank you for any advice.

[Deleted User]

Huh?

Whatever you pay off, you stop being charged interest on.

Whatever you don't pay off, they continue to charge you interest on.

CLAPTON

interest is charged on the daily balance from the time you make the purchase to the time you pay it off.

in practice this means that if you pay the full balance for two consecutive months then no more interest is charged

Yorkshire.Lass

My plan is to simple pay off the full balance in one lump sum. So from both answers here i understand that would wipe out all interest.
Correct?

Thank you.

andymc29

You should be trying to pay off whatever you can, when you can in order to save on interest. they add interest every month on the outstanding balance.

bengal-stripe

Yorkshire.Lass wrote: »

My plan is to simple pay off the full balance in one lump sum. So from both answers here i understand that would wipe out all interest.
Correct?

Not quite!

Interest has been calculated to the day the last statement got compiled. There is still interest due from the statement date to the date the payment was received. This interest (called trailing- or residual interest) will be billed on your next statement.

Only when you pay two consecutive payments in full, no more interest will be charged.

CLAPTON

Yorkshire.Lass wrote: »

My plan is to simple pay off the full balance in one lump sum. So from both answers here i understand that would wipe out all interest.
Correct?

Thank you.

no, you need to pay in full for two consecutives months to stop interest

that is because if you pay the full balance on the statement, there will be a few days between the statement being created (with the interest to that date) and the actual date you make the payment.
Interest will accrue between these dates which if paid in full when the next statement arrives, then the interest will cease.

thenudeone

Yorkshire.Lass wrote: »

will they sting me for the interest they would get over the coming months/years (centuries)

No they won't.

Unlike a loan (which has a fixed term and usually fixed repayments), a credit card is a fully flexible product. There are never any penalties for settling a credit card in full, because there's no fixed period and so no "early repayment".

Interest accrues for every day that you still owe money, but teh whole month's charge is added to the account once a month. Once you pay everything off, no more interest will accrue on that balance, but interest since the last statement will be added to the account at the next statement.

jenkofreeze

Hi there all - Just a follow up query.

Are there any instances where a long term credit card balance finally paid off won't have trailing interest?

For years I've whittled down balances on all my cards with no more than minimum and twice this year have been able to jump to a full balance payment.

Expecting a tiny amount to pay the next month to finish off the card I instead got a £0 balance statement.

Not that I'm complaining but I thought I had understood everything I've read here about trailing interest.

Any insight anyone please? where have I missed?

CLAPTON

how tiny is tiny?

seriousDFW

jenkofreeze wrote: »

Hi there all - Just a follow up query.

Are there any instances where a long term credit card balance finally paid off won't have trailing interest?

For years I've whittled down balances on all my cards with no more than minimum and twice this year have been able to jump to a full balance payment.

Expecting a tiny amount to pay the next month to finish off the card I instead got a £0 balance statement.

Not that I'm complaining but I thought I had understood everything I've read here about trailing interest.

Any insight anyone please? where have I missed?

I've had that before - HSBC for example did not add any trailing interest when I paid that off in full for the first time.