4 ms·

Btw, for people who aren't living paycheck-to-paycheck, the interest accrual isn't the real issue to worry about. Imagine: if you spend $300 in a month, and mis

Btw, for people who aren't living paycheck-to-paycheck, the interest accrual isn't the real issue to worry about. Imagine: if you spend $300 in a month, and miss your payment by a whole month once in a while, even at a crazy 20% APR, you'll have to pay $5. Unless you only have a few dollars to your name, it's probably not going to suddenly break you. The real issue, I think, is the impact on your credit history for missing a payment entirely, i.e. not paying the minimum amount due. Even if it's $1, you need to pay all of it. That's the real penalty to worry about.

jjav 6y ago
> if you spend $300 in a month, and miss your payment by a whole month once in a while, even at a crazy 20% APR, you'll have to pay $5 Careful with this though. The interest rules are very complex. One would think you pay the interest + penalty + balance in full and that's that, but no. Once the account goes into "charging interest" mode, it keeps charging interest on subsequent months even if you pay in full as long as there is a balance on the day of the cycle close (which if you're using the card, there always will be!) The way out of that trap is, if you ever have a late payment, stop using that card entirely and pre-pay the entire balance (including charges not billed yet) before the close of the cycle. The goal is to get a statement with $0 balance. That will reset the account state to normal.
- dataflow 6y ago
  Wow. I knew that balance transfers had similarly terrible rules, but I hadn't realized that normal usage can end up like this too. That's so... predatory. How is this even legal? If you pay everything in full such that your balance is $0 on a given day, what are they even charging interest on at the end of the billing cycle? The grace period just goes away for the whole billing period?
  - jjav 6y ago
    > such that your balance is $0 on a given day I'm not sure about that one. Maybe getting the balance to zero on any given day (not just cycle closing day) is enough to reset the account? I don't know. But I know they'll keep charging interest every month even if you pay in full every month, once the account goes into that state due to a single delayed payment. Looks like it's called residual interest? https://www.thepennyhoarder.com/debt/residual-interest/ https://www.thepennyhoarder.com/debt/residual-interest/
conductr 6y ago
The not paycheck to paycheck people I know, myself included, charge everything they can and put the credit card on auto pay for full balance. So in my case at least, your $300 is more like $10,000 monthly. I’d be pretty mad if something happened and I owed $100+ of interest but like you said, not as mad as having the late payment show up on my credit history Should mention I make ~$300 a month in cash back by doing this and that’s my main motivation. I actually hate the idea of cash back as I realize it just adds cost to the system but I’m just one dude and the world has spoken on the matter so I may as well get what I can out of it.
- bena 6y ago
  It's kind of messed up because it's like a permanent discount at every store you shop at because you have enough money to not be paycheck to paycheck. It costs more to be poor.
  - CaptainZapp 6y ago
    > It costs more to be poor. That's definitely true. Time to reintroduce Scalzi's take on the subject: https://whatever.scalzi.com/2005/09/03/being-poor/ https://whatever.scalzi.com/2005/09/03/being-poor/
  - Macha 6y ago
    See also the Sam Vimes boots theory of socioeconomic unfairness (from Men at Arms, 1993): > The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. > Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles. > But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

jjav 6y ago

> if you spend $300 in a month, and miss your payment by a whole month once in a while, even at a crazy 20% APR, you'll have to pay $5 Careful with this though. The interest rules are very complex. One would think you pay the interest + penalty + balance in full and that's that, but no. Once the account goes into "charging interest" mode, it keeps charging interest on subsequent months even if you pay in full as long as there is a balance on the day of the cycle close (which if you're using the card, there always will be!) The way out of that trap is, if you ever have a late payment, stop using that card entirely and pre-pay the entire balance (including charges not billed yet) before the close of the cycle. The goal is to get a statement with $0 balance. That will reset the account state to normal.

dataflow 6y ago
Wow. I knew that balance transfers had similarly terrible rules, but I hadn't realized that normal usage can end up like this too. That's so... predatory. How is this even legal? If you pay everything in full such that your balance is $0 on a given day, what are they even charging interest on at the end of the billing cycle? The grace period just goes away for the whole billing period?
- jjav 6y ago
  > such that your balance is $0 on a given day I'm not sure about that one. Maybe getting the balance to zero on any given day (not just cycle closing day) is enough to reset the account? I don't know. But I know they'll keep charging interest every month even if you pay in full every month, once the account goes into that state due to a single delayed payment. Looks like it's called residual interest? https://www.thepennyhoarder.com/debt/residual-interest/ https://www.thepennyhoarder.com/debt/residual-interest/

conductr 6y ago

The not paycheck to paycheck people I know, myself included, charge everything they can and put the credit card on auto pay for full balance. So in my case at least, your $300 is more like $10,000 monthly. I’d be pretty mad if something happened and I owed $100+ of interest but like you said, not as mad as having the late payment show up on my credit history Should mention I make ~$300 a month in cash back by doing this and that’s my main motivation. I actually hate the idea of cash back as I realize it just adds cost to the system but I’m just one dude and the world has spoken on the matter so I may as well get what I can out of it.

bena 6y ago
It's kind of messed up because it's like a permanent discount at every store you shop at because you have enough money to not be paycheck to paycheck. It costs more to be poor.
- CaptainZapp 6y ago
  > It costs more to be poor. That's definitely true. Time to reintroduce Scalzi's take on the subject: https://whatever.scalzi.com/2005/09/03/being-poor/ https://whatever.scalzi.com/2005/09/03/being-poor/
- Macha 6y ago
  See also the Sam Vimes boots theory of socioeconomic unfairness (from Men at Arms, 1993): > The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. > Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles. > But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.