Interest question

Narola1976

Hi, just wondering if someone will have the answer. The details are:

HSBC credit card 28.9% APR 
interest bearing balance - £837.05 (having been using avalanche method to bring this down making massive payments)
0% balance circa £6800 (13 months to go)
current payments go off the interest bearing balance and not 0% one in accordance with T&C
May statement indicates estimated interest for June is £17 or thereabouts 

I want to pay the interest bearing balance off in full this month but I am not sure if I have to pay the balance plus estimated interest to be able to clear it this month or if I only need to pay the balance. In other words is the estimated interest only applied if I don’t pay the full amount for June. I am keen to not have any residual interest next month if this is possible as I want to get shot of this interest bearing balance ASAP so will pay whatever I need to. Just not sure what the amount would be. Psychologically and financially it is important to finish it this month. 

Thank you
Narola

[Deleted User]

There will be trailing interest if you only pay the statement balance as interest continues to accrue after the statement is produced, so you need to estimate and clear that interest.

Paying the estimated interest will overpay slightly.

[Deleted User]

Pay off what you can and set the direct debit to pay off in full and leave it for a couple of months just in case, safest way

MallyGirl

Deleted_User said:

Pay off what you can and set the direct debit to pay off in full and leave it for a couple of months just in case, safest way

that won't help if OP still has balance on 0%.
You need to pay the estimated interest as well and then there will still be a little bit of trailing interest the following month

[Deleted User]

MallyGirl said:

Deleted_User said:

Pay off what you can and set the direct debit to pay off in full and leave it for a couple of months just in case, safest way

that won't help if OP still has balance on 0%.
You need to pay the estimated interest as well and then there will still be a little bit of trailing interest the following month

Yes I just saw it's 2 balances on one card, my mistake, I thought it was 2 cards. That said, if he is paying say £850 this month and then a fixed monthly sum of £250 or something like that they should allocate the next month to the interest first before the 0% debt as pretty much all card issuers do

Narola1976

Thanks ...so it is as I suspected...to be able to clear the whole balance I will need to pay the full amount plus whatever has been calculated on the statement to be the estimated interest. Maybe a £ or 2 more just in case. I just want to make sure that when the next statement is produced around 12th June, all that will be left is the 0% balance. Thank you all for your advice. 

[Deleted User]

If you pay off the full balance this month plus some extra, it will clear the old BT and probably allocate some to the other BT offer, any trailing interest will be on the next statement which should then be cleared when you make your final payment - so if you then are paying £570 a month say (6800/12 with rounding) then any remaining interest will be paid and you will start hitting the main balance