Quick question on credit card interest

moonmonkey

Hi,

I've always tried and paid the full amount off every month on a credit card as I didn't want to get hit by interest etc.

However I've getting married soon and things are starting to mount up as you would expect.

Therefore this month I paid £4652 off my credit card except for £500, leaving me with £500 to pay this month.

I have now had my statement through and they have charged me £104 interest, which is apparently on the whole £5152, not the 500 quid as I would have expected.

Is this normal for credit cards and have I been naive here as I've never really had to pay interest before?

If it is the case, then how do they ever expect people to get out of debt if they are paying the majority of the balance off?

Thanks.

YorkshireBoy

moonmonkey wrote: »

Is this normal for credit cards

Yes, it is.

If it is the case, then how do they ever expect people to get out of debt if they are paying the majority of the balance off?

I suppose the cynical answer is they don't, or at least hope they don't! They hope you become a 'revolver'. After all, that's how they make money.

moonmonkey

thanks - one to put down to experience I guess.....

NickX

moonmonkey wrote: »

I have now had my statement through and they have charged me £104 interest, which is apparently on the whole £5152, not the 500 quid as I would have expected.

Yes this is normal for credit cards.

Even if you paid £5151.99 leaving a penny on the account, they would then deem that you have not paid in full and you would then pay interest on every transaction from the date it was actually made.

You ONLY get and interest free period if you pay the Balance off in FULL.

I know that £104 seems a lot, and this is how they make their profits, by the millions of people who do not pay in full. In actual fact they make a loss on the people who do pay in full, so in a sense you are covering their profits on those people aswell.

DestroyingAngel_2

How else do you suppose banks or credit card companies make their money, if they didn't charge interest??!

Milarky

It would have been a lot cheaper, for instance, even to have asked for a cash advance of £500 either just before or just after paying the full balance [Something Martin Lewis would have a fit over for my suggesting it]. Assuming they charge 2% for the £500 by way of a fee (£10) and 2 and a bit percent per month and you repaid after one month (£12?) £22 instead of £104....

It's all in how 'play' your cards (literally)!