credit card interest charge

stu007

Last month I had a credit card balance of £1267, I paid £1200 of the balance.

Today I have had this months statement and I have been charged £32 interest.

I usually pay the balance in full, is that right? They have charged me interest on the full £1267 rather than the £67 balance I left.

Just want to check before I phone them up.

CLAPTON

you are charged interest from the day you make a purchase to the day you pay the amount off

however, if you pay in full each and every month then the interest is waivered

so as you didn't pay in full the 'normal ' rule applies so you pay from the date of purchase to the date you paid

Eydon

As Clapton says.

You could have paid off £1266.99 and you would have still been charged £32 in interest.

You will also find that there will be additional interest (called trailing interest) next month. This will be the interest on the remaining £67 calculated from when the statement was produced to when they receive your £67.

chattychappy

Strangely, if you can't quite pay off the full balance, it can actually be worth getting a cash advance for the shortfall so that you can pay off the full balance. Yes, you'll probably pay a cash advance fee and will pay interest, perhaps even at higher rate. But both the fee and the interest will be calculated based on the shortfall only and the interest will only start to run from the date of the advance.

In your case, if the cash advance fee was 3% and you took a month to pay off the advance with a rate of 2%/month (APR 26%), then on £67, you'd pay a £2.01 fee (probably a £5 minimum) and £1.34 interest. So £6.34 in total.

thenudeone

CCs always charge interest for every £ you borrow for every day it's borrowed
UNLESS
you pay off the FULL statement balance in time,
and
you also paid last month's statement balance (if any) in full and on time.

If you didn't pay off the last statement in full, the same amount of interest would have been charged this month.

If you paid last month's off in full, it would have been better to put £100 or so on another card, on which you just pay the minimum, to enable you to pay off the full balance on the main card.

Wheres_My_Cashback

stu007 wrote: »

Just want to check before I phone them up.

And with the answers above in true MSE style you've saved yourself the cost of a phone call