2 ms·
> 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
by 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 agoWow. 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/