'amateur' question re credit card interest

Dajoruna

Hi guys, first time poster and relatively new to the whole idea of credit cards so go easy on. Apologies if answer to this question is obvious, but I am finding some of the technical language on my credit card providers website rather confusing!

Anyway my question is as follows:

on my online statement it says 'estimated interest' then gives an amount - surely this should be known interest as the interest is based on the balance at the statement date? basically what im asking is say if the balance is £500 and the 'estimated interest' is £x at the statement date, when it comes to the billing date does the interest increase if the balance has increased or is it based on only the amount at the statement date? sorry for the utterly dumb question but getting rather confused and trying to work out whether because ive since put more on the card, whether the estimated interest will be higher this billing date or the next one when the money is actually on the statement... hope that makes sense!

or to rephrase:

is the interest that is going to be added on my billing date (16th this month), based on the amount on the statement for this billing month OR the amount NOW on the card (i.e. that will be on at the 16th)

Thank you in advance for your help. Regards,

Dajoruna

YorkshireBoy

The estimated interest figure is based on your minimum payment being received on the payment due date.

If you make your payment earlier (if you don't have a minimum payment DD set up for example), then the interest charged next month will be lower than the estimated interest figure given.

Dajoruna

so the interest will be based on the balance at the statement date NOT the billing date? I have made in excess of the minimum payment since the statement, but have also increased the balance on my card... im just a bit confused!

Dajoruna

anyone? i only ask because I am close to the limit on my card and am trying to work out whether the interest is going to take me over

YorkshireBoy

If you did not clear the last statemented balance in full, then the actual interest applied on your next statement will be more than the estimated interest shown on your last statement.

Just how much more will depend on your interest rate, purchases made since the last statement, any cash advances taken, etc, etc.

If you're worried, and because interest is calculated daily, then I suggest you make an additional payment before your statement is produced.

Dajoruna

not able to make an additional payment, hence all the questions if you are under the limit on your card but the interest takes you over the limit, do you get a charge? i.e. £12 'fine'?

YorkshireBoy

I would think so, yes, because the balance + interest forms the new balance.

Could you not borrow from friends/family?

NickX

Why not call them up, explain the situation, and ask for a small increase in your Credit Limit to cover the extra interest accrued ?

I would not think this an unreasonable request.

They may even offer to waive the overlimit charge if it does get incurred.

I would definitely advise talking to them.

King_Weasel

Don't forget interest rates on credit cards are typically high (though not usually as high as store cards). Find out what the rate is - it will be on your statement somewhere.

If you possibly can, avoid credit card debt. Apart from YorkshireBoy's friends/family (but see my signature below) can you get a loan from your bank?

But I guess these are get-out-of-debt, not credit card, issues.