Credit card and interest when balance paid in full

just.me_3

Hi all,

I know it would vary by terms & conditions and card providers, but I wondered if someone could clarify this for me. It might seem like a daft question I know, but I'm not 100% sure so would like some to help

I have a Vanquis card and the APR is 39.9%. I am only using the card to make small purchases each month, to rebuild my shocking credit history.

The card was issued to me in September, and I have not yet had my first statement. It is due on 20th November. However, for all of the purchases I made on the card since I got it, I have repaid in full and cleared my balance, so I have the full £500 credit limit available to spend again.

When my statement is produced on 20th November, will it state I owe £0.00 or will it calculate the interest for all of the purchases I made, even though I have cleared them before the statement date?

Hope this makes sense.

Many thanks

bengal-stripe

You might not even get a statement if there is no balance on the card. There won't be any interest because you have paid it off before the "payment-due" date (which is likely to be around December 10th.

But in future wait for a statement to be issued, before you pay the bill, otherwise you CC will have a zero balance month after month and it looks as if you would not use the card at all.

just.me_3

Thanks for the advice I'll make another purchase on the card a week before the statement due date and then pay it once the statement is produced.

YoungTrafford

Vanquis are one of the cards that's a little different... You only qualify for the xx days interest free if you've paid in full for both of the last two months. So, if I owe 500 and pay 250 in month 1, not only is the £250 liable for interest in the next month, but also all new purchases are liable for interest from the moment you make them.

In month 1 with the card, it counts that you paid in full the month before you got the card, ie 0 off a balance of zero, so like other cards you only pay interest if you fail to make a full payment at some point. If you do have to part pay one month, it's best to not use the card for a month and then to pay in full. There are others that work this way, but I can't think which.

rehanmalik3030

If you clear your balance in full on or before the due date taking into account the time frames for posting payment on to your credit card account then with regards to purchases if you pay your balance off in full you will not pay any interest.

Please do not confuse this with cash withdrawals where interested is charged from day 1 and you cannot get away with not paying interest despite paying the full outstanding balance.

thebritishbloke

YoungTrafford wrote: »

Vanquis are one of the cards that's a little different... You only qualify for the xx days interest free if you've paid in full for both of the last two months. So, if I owe 500 and pay 250 in month 1, not only is the £250 liable for interest in the next month, but also all new purchases are liable for interest from the moment you make them.

In month 1 with the card, it counts that you paid in full the month before you got the card, ie 0 off a balance of zero, so like other cards you only pay interest if you fail to make a full payment at some point. If you do have to part pay one month, it's best to not use the card for a month and then to pay in full. There are others that work this way, but I can't think which.

You're incorrect. Vanquis are exactly the same as every other card provider. You'll still have residual interest to pay on the second month, because of the time between your first statement being generated and the first payment date, you get charged interest on that, but it's not counted until your next statement.

OP, use the card for small purchases or fuel or something, set up a direct debit to pay it in full and forget about it. Just make sure you don't go over 30% of your credit limit. If you never get statements, you won't help build up your report.

SnowTiger

YoungTrafford wrote: »

Vanquis are one of the cards that's a little different... You only qualify for the xx days interest free if you've paid in full for both of the last two months. So, if I owe 500 and pay 250 in month 1, not only is the £250 liable for interest in the next month, but also all new purchases are liable for interest from the moment you make them.

What's a little different about that?

That's how most credit cards work.

YoungTrafford

SnowTiger wrote: »

What's a little different about that?

That's how most credit cards work.

Most cards give you 56 (max) interest free. Assuming you pay in full there is no interest to pay. However, if you don't pay in full there is.. This is normal. Some cards also take your interest free period of NEW purchases, so as well as paying interest on the outstanding balance, you also pay interest on new purchases regardless of wether you pay them off in full or not. So in most cases if you had a 500 bill and paid half off, leaving 250 plus interests, let's say 260 and then load that card with another 100, finally paying the full balance, there would be residual interest on 260 of the debt as it was already out of its interest free period, whereas with other cards your residual interest is on the whole 360 balance. These cards say on their T&Cs that the interest free period is subject to the card having being paid in full for TWO months.

See the no interest free section here http://www.which.co.uk/money/credit-cards-and-loans/guides/how-credit-card-interest-is-calculated/

SnowTiger

YoungTrafford wrote: »

Most cards give you 56 (max) interest free. Assuming you pay in full there is no interest to pay. However, if you don't pay in full there is.. This is normal. Some cards also take your interest free period of NEW purchases, so as well as paying interest on the outstanding balance, you also pay interest on new purchases regardless of wether you pay them off in full or not.

[...]

See the no interest free section here http://www.which.co.uk/money/credit-cards-and-loans/guides/how-credit-card-interest-is-calculated/

Is this what you mean?:

If you owe money from a previous month, some cards, such as M&S, Sainsbury's and Tesco, scrap your interest-free period on new purchases — even if you pay the next bill in full.

As far as I'm aware all the credit cards I have work that way... and I have lots! It's standard practice. You and Which? appear to be suggesting it's unusual.

Claree__x

thebritishbloke wrote: »

Just make sure you don't go over 30% of your credit limit. If you never get statements, you won't help build up your report.

Just curious, why not? I have a vanquis card which I very rarely use and I don't think I've ever gone over 30% but not intentionally.

SnowTiger

Claree__x wrote: »

Just curious, why not? I have a vanquis card which I very rarely use and I don't think I've ever gone over 30% but not intentionally.

I've seen it here: some people spent right up to the limit, then forget a purchase or interest and breach it.

And, of course, if you spend £300 a month on your credit card and your limit is only £500 you may end up with a balance of £600: (up to) 56 days interest-free period is nearly two months (2 x £300).

30% may be a little on the low side, though.

On the other hand, if you do spend close to your limit your card provider may see it as an indication that a larger limit would be suitable.