Meaning of “Pay in full” CC

K1ngking

Hi,
When in comes to a rewards CC for example, could someone confirm exactly what is required to pay the balance in full.

if I get a new CC on the 1st of the month and spend £1k on it’s the following week. To avoid interest, do I need to clear that £1k before my first statement? Or, once I receive the statement do I need to clear the balance?

Thanks in advanced

eskbanker

The latter, as long as you settle each statemented amount in full by the due date then you shouldn't incur any interest (assuming no cash or cash-like transactions, etc).

Mark_d

If you choose to pay your credit card bills by direct debit, you usually get a choice of either paying the minimum balance or the full statement balance.  My recommendation would be to set up a direct debit to pay the full statement balance each month.  I have direct debits like this for all my credit cards

Brie

Just as an add on......sometimes a card will allow a set amount to be paid rather than the minimum or the full amount.  This is great if you have a balance transfer you are working to clear or want to have control of your money.  You can always make extra payments as required.  

So you have run up £500 of purchases and you can minimum pay that (say 2%) which means your DD will be £10 (I think) or your can set it at the full payment (£500) or you can say you set your payment at £20.  Which means that every month they will take £20 unless your minimum is more than that.  And if you decide to pay another £480 you can as long as it's by the statement date to ensure there's no interest charged.  

km1500

you do not need to clear anything before your statement if you are talking about purchases on a credit card 

what you need to do is wait for your statement and then pay your statement balance by the date required.

this is known as 'paying in full:

CliveOfIndia

Assuming it's a bog-standard interest-charging card and you've made no cash withdrawals or cash-like transactions, just wait for the statement to arrive and pay the full amount as shown on the statement.

As long as you pay before the "payment due" date (typically around 3 weeks or so after the statement is produced, but it'll be clearly shown on the statement) you'll pay no interest.

The simplest way is to set up a Direct Debit for the full amount - once that's in place you can forget about it (though obviously you need to make sure the funds are available in your bank account to cover the DD when it's called).

There's no need to make interim payments (i.e. you don't need to make a payment as soon as you've made a purchase), that just complicates matters.  Just wait for the statement then pay in full.

prowla

Just a note: if you make interim payments they will reduce the amount of the statement, but it will still include a minimum amount to be paid if there is remaining balance when the statement is issued.

Nasqueron

Spend £500 on day 1
Day 31 get statement to pay £500 by day 56
Day 56 have direct debit to pay balance in full

Max rewards, no interest, no black markers

eskbanker

Nasqueron said:

Spend £500 on day 1
Day 31 get statement to pay £500 by day 56
Day 56 have direct debit to pay balance in full

Max rewards, no interest, no black markers

Just to be clear, there's only one day in each month where it's possible to benefit from 56 days before payment!

Better IMHO for credit card newbies to understand the monthly cycle, i.e. everything spent in the month leading up to the statement being generated (on a date that's largely fixed) should be paid before the payment due date several weeks later.  Some cards collect DDs ahead of that due date rather than on it too....

Nasqueron

eskbanker said:

Nasqueron said:

Spend £500 on day 1
Day 31 get statement to pay £500 by day 56
Day 56 have direct debit to pay balance in full

Max rewards, no interest, no black markers

Just to be clear, there's only one day in each month where it's possible to benefit from 56 days before payment!

Better IMHO for credit card newbies to understand the monthly cycle, i.e. everything spent in the month leading up to the statement being generated (on a date that's largely fixed) should be paid before the payment due date several weeks later.  Some cards collect DDs ahead of that due date rather than on it too....

Yes, hence spend on day 1?

eskbanker

Nasqueron said:

eskbanker said:

Nasqueron said:

Spend £500 on day 1
Day 31 get statement to pay £500 by day 56
Day 56 have direct debit to pay balance in full

Max rewards, no interest, no black markers

Just to be clear, there's only one day in each month where it's possible to benefit from 56 days before payment!

Better IMHO for credit card newbies to understand the monthly cycle, i.e. everything spent in the month leading up to the statement being generated (on a date that's largely fixed) should be paid before the payment due date several weeks later.  Some cards collect DDs ahead of that due date rather than on it too....

Yes, hence spend on day 1?

But IMHO it's not obvious what 'day 1' means in this context - day that account is opened, day that physical card arrives, date of first purchase, 30 days before first statement is generated, etc (all of which may differ, with correspondingly varying intervals to statement and payment) - so was just emphasising that those new to credit cards and hoping to optimise fee-free period would generally benefit from understanding the monthly cycle.  There have been plenty of previous threads from those under the mistaken impression that every purchase carried a 56 day fee-free period, for example, by virtue of missing the key words 'up to'!