Credit card interest - am I very dim?

edited 30 November -1 at 1:00AM in Credit Cards
4 replies 653 views
HoopieHoopie Forumite
21 Posts
Part of the Furniture Combo Breaker
edited 30 November -1 at 1:00AM in Credit Cards
Having lived for several decades and more, I can't believe that I have just found out something completely new about credit cards....

I had a balance of £2300. I paid off £2000 last month (couldn't raise the whole amount). But I was charged interest on the £2300 (£57).

I queried this with Nationwide as I've never paid that much interest, and they say that's how credit cards work (they did refund agree to waive the charge this time, so credit to them :j ).

I thought if I paid off £2000 then I paid interest on the £300 only?

Have I been wrong all these years?? Can anyone explain this to me in simple terms? (yes I know I should always pay off the whole amount...but I didnt)

Replies

  • zx81zx81 Forumite
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    Yes, you've been wrong all these years.

    You pay interest on the amount for as long as you borrow it, unless you clear in full, in which case they waive the interest.
  • HoopieHoopie Forumite
    21 Posts
    Part of the Furniture Combo Breaker
    ah, oh well. Thanks for putting me straight.

    Seems crazy that I pay the same interest whether I pay £2000 off or the min payment?
  • bengal-stripebengal-stripe Forumite
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    Hoopie wrote: »
    I thought if I paid off £2000 then I paid interest on the £300 only?

    Interest is calculated on the daily balance. So in this case, let's say: 20 days balance £2300, then your payment gets credited leaving another 5 days with a balance of £300.
  • zx81zx81 Forumite
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    Hoopie wrote: »

    Seems crazy that I pay the same interest whether I pay £2000 off or the min payment?

    You don't.

    Interest is no longer charges on the amount you have paid off. If you had paid minimum, your interest next month would be much larger.
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