Stupid Credit Card Question

peterc2609

If my minimum payment is £5 but I pay, say £500 - 1000 a month... and the balance is only like £1600 will I incur interest???

kittykitten

Unless you have a card that has a 0% interest period, you'll always accrue interest unless you clear the whole balance each month. But you only accrue interest on the balance you don't clear, so if your balance is £1600 and you pay off £1000, next month's statement will show interest on the £600 you didn't pay off. (Assuming you make the £1000 payment before the dute date on the bill - if you don't you'll find you pay interest on the whole £1600).

Hope that makes sense,

Julie xx

thriftymomma

Yes you will.

NickX

kittykitten wrote: »

But you only accrue interest on the balance you don't clear, so if your balance is £1600 and you pay off £1000, next month's statement will show interest on the £600 you didn't pay off. (Assuming you make the £1000 payment before the dute date on the bill - if you don't you'll find you pay interest on the whole £1600).

Not quite true - each separate transaction will accrue interest on a daily basis from the date the transaction was made until the date that part of the balance was paid off.

So in this instance, even if you pay off £1000 before the due date, you will still pay interest on this £1000 from the date of the transaction until the date of payment. The additional £600 will stay on the account accruing interest also.

You only get away without paying interest on any amount by paying the entire balance off before the due date every month.

The only exception to this is if you have a promotional 0% rate in which case you can simply make the minimum payments and still pay no interest.