Dumb credit card interest question

purple-rain_3

Hi everyone.  I am really confused.

I had a credit card balance of £10,008.92 on my 26 October statement. 

I then made payments to my card totalling £10,248.43 before the 20 November due date. 

I did incur new spending on the card after 26 October.  However, I thought because I cleared the balance from 26 Oct statement in full that I would not get charged interest?  Is that not correct?  I got charged £71.27 of interest on my 26 Nov statement and I can't work out why.

Brie

Did you clear the previous month's balance on time?  £71+ interest is likely for the £10k+ balance and implies that your previous bill wasn't paid on time.

CliveOfIndia

Did you pay the £10,248.43 after the statement was produced and before the "payment due" date?  If you made the payment before the statement was produced, that's probably the cause of it - doing that, it gets very confusing.

But if you paid the full statement balance once the statement arrived, then the most likely explanation is that there was a cash transaction on there.  A cash transaction can be withdrawing cash from the credit card, but there are several other transactions that can be classed as "cash-like transactions".  Common ones include gambling, buying foreign currency, buying gift cards (though this one very much depends on where you buy the cards from).

If there any cash withdrawals or cash-like transactions on the statement, these will incur interest (as well as usually a fee) even if the statement balance is paid in full.

The other explanation might be trailing interest if the previous statement wasn't cleared in full.

purple-rain_3

CliveOfIndia said:

The other explanation might be trailing interest if the previous statement wasn't cleared in full.

Thanks so much.  It must be this - I didn't realise you also had to have paid the previous statement in full.  Learnt my lesson. There were no cash transactions and I always pay on time.

CliveOfIndia

purple-rain_3 said:

CliveOfIndia said:

The other explanation might be trailing interest if the previous statement wasn't cleared in full.

Thanks so much.  It must be this - I didn't realise you also had to have paid the previous statement in full.  Learnt my lesson. There were no cash transactions and I always pay on time.

No problem.  And don't worry, it's one that catches a lot of people out.  If you Google for "Trailing Interest" you'll find loads of easy-to-follow illustrations of how and why it works.