How does credit card interest work?

sarahlou29xxx

My monthly statement is £810 and it says estimated interest £28.45( or something like that) so if I don't pay in full will that be added to next months statement?
Does the interest amount come off the available to spend limit ?
Also I have used card since my statement.
If I don't pay this months in full will the purchases I've made this month get charged interest too?

YorkshireBoy

sarahlou29xxx wrote: »

My monthly statement is £810 and it says estimated interest £28.45( or something like that) so if I don't pay in full will that be added to next months statement?

It's not as simple as that. If you look more closely at your statement (and your T&Cs) you'll see that it says the figure is based on several assumptions, including:

1. You make the minimum payment on the due date, and
2. You make no further transactions on the account.

Does the interest amount come off the available to spend limit ?

Sorry, don't understand the question.

Also I have used card since my statement.
If I don't pay this months in full will the purchases I've made this month get charged interest too?

Yes.

grumbler

sarahlou29xxx wrote: »

Does the interest amount come off the available to spend limit ?

Yes, it's added to the balance thus reducing 'available to spend' amount.

sarahlou29xxx wrote: »

Also I have used card since my statement.
If I don't pay this months in full will the purchases I've made this month get charged interest too?

YorkshireBoy wrote: »

Yes.

Are you sure?
I think interest is waived on new purchases if the next statement balance is paid in full.

YorkshireBoy

grumbler wrote: »

I think interest is waived on new purchases if the next statement balance is paid in full.

Don't you have to pay two successive statements in full to stop incurring interest?

grumbler

OK, Barclaycard for instance:

How we charge interest

If you pay your main balance ... due for that month in full by your payment due date, the following will apply:
• We won’t charge interest on purchases ... that have been added to your account since your last statement.
• We will only charge interest on outstanding standard balance items (including purchases)... included in your current statement balance up to the date of your current statement.

I think (not sure) two months of full payments are needed to stop trailing interest.

YorkshireBoy

With Halifax...

We will not charge interest on Purchases shown on your current statement if you pay the full balance shown on that statement by the payment date (provided you have also paid the full balance on the previous statement by the payment date). If you have not previously paid in full, we’ll add interest on those Purchases to your statement and we’ll charge that interest from the date we originally added the Purchases to your account.




http://www.halifax.co.uk/creditcards/help-guidance/terms-and-conditions/balance-transfers-and-purchases/ (condition 4.4, 2nd bullet)

sarahlou29xxx

Well I've paid this months in full and next statement is 25th December .
So if I say pay half of 25th December statement then pay the rest on jan statement but don't use my card after 25th December will I only get the interest shown on statement ?

sarahlou29xxx

So if my bill in dec is say £900 and estimated interest is £35.
If I pay £600 off then don't use the card till the rest is paid will I just get charged £35?

Dobbibill

Who is your credit card with?

sarahlou29xxx

It's with aqua

Dobbibill

Found this on their website

We charge you interest on all transactions from the date we first charge the amount to your account. However, if you pay your total balance in full and on time each month, you will not be charged interest on your purchases. If you do not pay the total balance shown on your statement each month, we will add the interest charges to your next statement balance.

My understanding is this....

If you pay off in full you get what's called a 'grace period' on your purchases, so although interest is calculated daily it is not charged as you pay in full when the statement is due.

If you don't pay in full, you will be charged the interest from the previous month for every day you owed the money, as you chose not to pay in full and utilise your interest free grace period. You will then have interest calculated daily on the remaining amount until that is paid.

in your case interest on £900 for the amount of days you owe that amount, followed by interest on £335 (the remaining amount after you have paid £600 plus the interest charge of £35) on the following statement, until you pay that amount.

Because you have not paid the capital in full on statement 1, you will then have trailing interest, which would be the interest on the £335 calculated from the statement date to the due date. The £900 plus interest will then be paid off over 3 statements if the 2nd and 3rd statements are paid in full.

HTH