« I've Never Had a Credit Card in My Own Name. What Do I Do? | Main | Getting a Loan With Bad Credit »
April 21, 2006
The Hidden Interest Charge
Interest is typically calculated on a daily basis if your account has an outstanding balance. Interest calculations begin on transactions the day the transaction is posted to your account, usually within a few days of having made the purchase. However, if you pay the total balance indicated on your statement on or before the due date, no interest will be charged.
Marnie Worldman charged $1,000 on her credit card last month. She paid her balance in full by her payment due date, so she was not charged any interest. Her sister Deborah also charged $1,000 last month. However, Deborah made a partial payment of $400 on the due date so:
She was still charged interest on the full $1,000 up to the day the $400 was credited, since she had not completely paid off her balance
The remaining balance of $600 became the "retail revolving balance," which would continue to accrue interest until it was repaid.
Even through Deborah paid off $400 by the due date, she was still charged interest on the total $1,000 up until the date the $400 payment was made. That's because when you make only a partial payment, you are charged interest on the total balance. The only way to avoid paying any interest is to pay off your balance in full every month.
Trackback Pings
TrackBack URL for this entry:
http://www.crediteria.com/cgi-bin/mt/mt-t.cgi/38