Interest Question

RachelBP

Hoping someone a little more knowledgeable than me will be able to answer this with ease...

I have two credit cards both have a £0 balance 0 - one was a student card and one I took out to use the 0% when I came off motability and suddenly needed cash for a car of my own + insurance etc. I don't really use them otherwise, so I'm not so sure when it comes to the following situation...

I need to book a flight to the US, its urgent and short notice. I don't have that kind of money lying around in my bank account so I think it will have to go on a credit card. However, I think I could pay it off with a some from my end-of-Sept pay and my end-of-Oct pay.

If I bought the flight now and my statement next comes on the 19th of September. When would I have needed to pay the amount off by to avoid being charged interest?

I suspect the answer is 19 October. I wont be able to do it by then, but if I pay off say, half of it, will I then be charged less interest by the time I can pay it all off on 31 October?

Sorry if it is a really dumb question. I just want to make sure I'm not paying nay more than I need to.

Tixy

For no interest it would be the due date shown on your 19 September statements (likely earlier than 19 October).

If you don't pay the full balance then interest is calculated on the balance daily from when you made the purchase to any payments made.

If the card hasn't been used for a bit it could be worth calling them and asking if they have a 0% purchase offer available to you as an existing customer (worth asking anyway).

CLAPTON

the 'pay by date' varies from CC to CC so only by looking at your CC statement of the T&Cs will you know that ... do you have an old statement or can you look on line?
it is usually 2 or 3 weeks after the statement date but can be longer.

then earlier you pay and the more you pay, the less the interest so making the max part payment as early as possible after the statement arrives will reduce the interest charged.

RachelBP

I found an old statement - statement date is the 9th not the 19th... and payment is due by the 3rd of the following month.

Does that mean - if I hold out until September 10th to book the flight, then it will come on my October 9th statement. If I pay it off by November 3rd do I get out of paying the interest? Or does interest start accruing as soon as that October 9th statement hits my mat?

Tixy

Yes that would work (assuming the due date for that statement is after the 3rd Nov)

Make sure you statement date is always the 9th (some lenders vary them by a day or 2 each month) to be sure it will appear on next time's statement.

Credit cards typically offer up to '56 days interest free credit' if you pay the statement in full and this would fall in to that category, getting you the maximum credit on your card based on the statement and due dates.

One other thing to consider is will your flight cost more if you book on the 10th rather than now, and if it does could that increase outweigh the interest cost of booking it now.

RachelBP

Tixy wrote: »

One other thing to consider is will your flight cost more if you book on the 10th rather than now, and if it does could that increase outweigh the interest cost of booking it now.

That's the risk! And no way to really know...

CLAPTON

how much are you going to spend on the CC?

what is the APR of the card?

RachelBP

Cost of flight - £441 at the moment

APR - 17.472% (the other is 24%!!)

vns

RachelBP wrote: »

Cost of flight - £441 at the moment

APR - 17.472% (the other is 24%!!)

Pay off as much as you can before the due date.

What ever you do, make sure you make theminimum payment once the statement has been printed. If you don't do this, then you'll pay extra surcharges! You should be able to pick up the statement online if you're out of the country by then - most banks offer this service.

eg, if your flight is £440 and you've paid off £200 before the printing of the statement then you'd only be charged interest on the 'balance' of £240.

Hope that helps...

RachelBP

I will definitely be able to make the minimum payment. I expect I'll pay £300 at the end of September and the rest at the end of October.

Tixy

vns wrote: »

eg, if your flight is £440 and you've paid off £200 before the printing of the statement then you'd only be charged interest on the 'balance' of £240.

Hope that helps...

If you don't pay in full then you would be charged interest on the £440 from the date of purchase until the date you repaid the £200, and then interest on the remaining balance from that payment date to the date you pay the remainder.