Credit card interest

vinos

I have a credit card with Barclaycard, I have a limit of £12,500, which I have paid off £10,000 for the last 4 months, but re-spent £10,000.The interest rate is 20.2%
I use the card for work, I usually transfer the money 1 hour before spending on the card.
My question is, how much interest should I be paying a month? My last interest was £194.
I thought because I paid off most of the balance in the month, i would only be charged interest on the balance of roughly £2500, so monthly interest is roughly 1.68%, making interest of roughly £42, but as I said before I am being charged £194 for the last month.
Is this correct?

[Deleted User]

Yes, it's correct. Interest is only waived if you clear the full amount.

You're charged interest on a daily basis on your balance.

18cc

as above, unless you clear the statement balance IN FULL you are charged interest on the whole statement amount.

So if the statement balance is 10000 and you pay off 9999 you are still charged interest on the full 10000

YorkshireBoy

Unless and until you pay two consecutive statements in full by their respective payment due dates then you will accrue interest each day on that day's closing balance.

These days start from the day after statement date to the next statement date.

Usually that means you will have 30 days or so of accrued interest added to your account at close of business on the statement date.

Your daily interest rate is calculated as:

(monthly simple rate x 12) / 365, or in your case (1.68 x 12) / 365 = 0.0552%

So say on days 1-28 your balance is £8,000 the interest accrued will be £8,000 x 0.0552% x 28 = £123.65

After clearing £6,000 of it on day 29, the remaining two days of the statement period will accrue £2,000 x 0.0552% x 2 = £2.21

This sequence will repeat until you clear 2 consecutive statements in full, as stated above.

Ben8282

vinos wrote: »

I usually transfer the money 1 hour before spending on the card.

Why?
In order to avoid paying interest you need to repay the FULL BALANCE of the previous statement prior to the payment due date. It's as simple as that.

chattychappy

Ben8282 wrote: »

Why?
In order to avoid paying interest you need to repay the FULL BALANCE of the previous statement prior to the payment due date. It's as simple as that.

Presumably because the OP is running close to the limit. So the logic is to clear some balance just before it is "re-spent". The OP didn't understand the interest rules.

People often know the "no interest if paid in full" rule. But they don't always understand how it is calculated if they don't pay in full. They assume (and perhaps the OP too) that if you partially clear the balance then you'll only pay interest on the bit you didn't pay off.

Candyapple

vinos wrote: »

I have a credit card with Barclaycard, I have a limit of £12,500, which I have paid off £10,000 for the last 4 months, but re-spent £10,000.The interest rate is 20.2%
I use the card for work, I usually transfer the money 1 hour before spending on the card.

Surely it would be better to either go for a card which offers you some perks if you are spending this amount of money on it for work?

https://www.moneysavingexpert.com/credit-cards/best-credit-card-rewards/

https://www.moneysavingexpert.com/credit-cards/cashback-credit-cards/

Or failing that, if you can't clear the balance in full every month, surely a 0% card would be much better for you?

https://www.moneysavingexpert.com/credit-cards/best-0-credit-cards/