Martin Lewis money show last night

bigadaj

The easiest way of thinking about it is that interest is accrued on all purchases but this isn't charged by the card company if the full balance is paid by the due date. So if the balance is not fully paid then interest is charged on the whole balance, people are the  surprised that they get charged interest if they pay in full the following month but there is trailing interest that is then accrued. Two consecutive full payments by the due date will then stop further interest.

RobM99

Deleted_User said:

Happy to show you otherwise.
The interest is calculated on the daily balance.  The total is then applied to your account on a single date.

OP states "£1000 balance on card, pay off £999... interest is paid on £1000".
These statements seem to contradict each other.

[Deleted User]

They don't.  They are charged interest on the £1000 each day that the balance is £1000.

Then when £999 is paid off, interest is charged on £1.

Paying an amount off the balance doesn't negate the fact that the balance was higher previously.

Dr_Crypto

When does the interest start to be charged? From the date of the purchase or the date of the statement? 

So if you have the following 
1/9/20 £100
5/9/20 £800
 
Payment due 15/9/20 and you pay £700 how do they work out the interest? 

Dr_Crypto

When does the interest start to be charged? From the date of the purchase or the date of the statement? 

So if you have the following 
1/9/20 £100
5/9/20 £800
 
Payment due 15/9/20 and you pay £700 how do they work out the interest? 

[Deleted User]

From when each transaction appears on your account. ie date of purchase or very shortly afterwards.

zagfles

Credit cards charge interest in the same way as most other loans, and indeed how interest is paid on savings accounts. It accrues daily on the outstanding balance.

The main difference is there is a specific exemption, where if you always pay in full, they don't charge any interest. That's the reason for the massive difference between paying in full and almost in full. If you pay almost in full, the exemption doesn't apply.