Please help on Interest rates

IloveElephants

Hi Everybody, Im new to this forum but was a reader for many years.

My problem is I have a capital one credit Mastercard that I have been using for over 2 years now, the original limit was £750 but now its increased to £2,750

I would use this card to pay for daily expenses like food at the supermarket and the occasional train ticket and petrol station, but I would never clear the balance before the end of the month. so if I spent £600 a month I would always pay more than the minimum balance and before the due date, so every month I would simply pay 600-£650 in via the app.

Now on a more detailed look on the bank statements when I downloaded them I was angry to see "next months estimated interest will be £40, its always been around £35-40 interest.

now im quite angry why im being charged so much,

my interest rates are

standard purchase 30.340%
standard cash 30.340%
standard b.t. 30.340%


I never use this card abroad or in the cashpoint. So please help, I dont want to pay 40 pound every month I may as well use my debit card where my savings are if that is the case.

What is the point of this card then if I have to clear the balance to 0 at the end of the month to avoid paying any interest?

Im really considering to clearing the balance and closing the account because I didnt think I was being charged so much.

Thank you everyone:)

[Deleted User]

If you're not clearing the balance in full, you're always going to be charged interest.

Either reduce your spend to a level you can clear, or use your debit card, but watch out for OD charges.

Broadyx

Why wouldn't you be charged interest if you aren't clearing the whole balance?

IloveElephants

Thanks for your comment, so you suggest at the end of every month clear the balance in full to 0 then start again?

But why do they say only pay the minimum payment which is something like £50 so I thought I would just pay around £600 then my balance is £400, I have booked some ryan air flights on this card aswell, if that was the case I should have just used my savings from my debit card.

I didnt know they would charge me £40 when I always paid back over the minimum amount each month and now my linit is 2,750 and I have never gone above 1,500 but now im thinking of just clearing it all

IloveElephants

Thanks for your comment,

Yes I get that but whats the point of a credit card then if you cant stretch the payment without them charging interest rates.

I should have simply used my savings all this time, ive done this for 2 years now and paid interest

[Deleted User]

They tell you that you need to make AT LEAST the minimum payment. But it's not a smart thing to do. If you borrow money, you pay interest on it (unless that interest is at 0%). Why would lenders never want to charge interest?

Clear it, then keep clearing in full month.

Before you come back next month asking they've charged you interest again, it's because of trailing interest - interest charged between you getting the statement and paying it off.

Pay two consecutive statements in full and interest will stop.

Willing2Learn

The only way to avoid interest is to pay the statemented balance in full every month, before the due date. If you do that, then you will save yourself £40/month (£480/annually). That £40/month could go into a savings account for an emergency fund...

BoGoF

The point is, that is how credit card companies make money. You are effectively borrowing the money. If you are not on a promotional rate you are going to be charged interest unless you pay in full every month.

IloveElephants

Thanks for your reply,

Yes Im glad ive noticed this small print, they hid it so well and never mentioned how much interest they charge on their app to fool others.

So what I aim to do is clear it before the due date next month because im fed up of paying interest for money I already have

IloveElephants

Just curious are they other credit cards that give you longer than 1 month to pay in full? or are most of these card companies the same, you have to pay in full each month to avoid interest

IloveElephants

Thanks willingtolearn

I agree, im really annoyed I didnt notice this 2 years ago. they were charging interest all this time. well from not I aim to clear the balance in full each month now