Stupid question about payments on credit card...

[VaKim]

We use our Visa card for basically everything, then pay it off monthly just like other bills so we never have any interest. I have what is probably a really dumb question. If my credit card payment is due on say, the 15th of the month, and I pay it on the 1st, will the things that we charge between the 1st and the 15th have to be paid on the 15th or else accrue interest? There are times when I would like to go ahead and pay it early due to larger charges (like we bought a generator on it last month), but don't want to take a chance of having to pay interest. Weird, I know, but please humor me.  :blushing:

[Night Elf]

DH says the way our credit card works, when we receive our statement, if we pay the full balance, it satisfies the statement for that statement period. Anything we charge after that is on the next statement and doesn't accrue interest.

[Arcadia]

It depends on when your statement is cut but very unlikely. Most likely you get a smaller amount due on your next statement.

 

For example my statement is cut on the 5th of every month and due on the 1st of the following morning month. So what I need to pay by October 1st is what I spent from August 6th to September 5th. What I spend after September 5th goes to the next bill due in November 1st. No interest charged until overdue.

Edited September 5, 2016 by Arcadia

[Annie G]

Had your statement closed by the 1st? Ours closes three weeks before the payment is due so any charges after that go on the next month's statement. 

I know how you feel- I pay ours every other week when dh gets paid and sometimes it's tricky to keep track to make sure we don't pay interest. 

[Tree Frog]

What is your statement ending date? If, as in your example, the ending date is the 30th, any new charges would go on the following statement. However, if the ending date is the 5th and you made a payment on the 1st, any additional charges made between the first and 5th would be due on that statement.

[trulycrabby]

You might need to talk to the folks at visa. Our card gets fully paid every month, and any other charges go to next month's statement, but each card may be different.

Edited September 5, 2016 by trulycrabby

[gardenmom5]

We use our Visa card for basically everything, then pay it off monthly just like other bills so we never have any interest. I have what is probably a really dumb question. If my credit card payment is due on say, the 15th of the month, and I pay it on the 1st, will the things that we charge between the 1st and the 15th have to be paid on the 15th or else accrue interest? There are times when I would like to go ahead and pay it early due to larger charges (like we bought a generator on it last month), but don't want to take a chance of having to pay interest. Weird, I know, but please humor me.  :blushing:

you have a billing date, and a cut off date for each cycle.  this enables the cc company to send out a billing statement ahead of when the bill is due.

 

do you know what your cut-off date is?   AFTER the cut-off date would be the *next* billing cycle.

 

for example - billing is the 15th, and cut-off is the 30th.  on the 15th, you are paying for items you purchased by the 30th (e.g. cut-off date) of the previous month.

[VaKim]

Thanks everybody. We do it all completely online. I'll go check things out.

[Guest]

DH says the way our credit card works, when we receive our statement, if we pay the full balance, it satisfies the statement for that statement period. Anything we charge after that is on the next statement and doesn't accrue interest.

This is how I pay mine. I pay the statement balance, not the up-to-the-minute balance. The things charged after the statement closing date do not accrue interest until the next month, if it were THEN not paid in full.

[SparklyUnicorn]

No interest if paid in full on time.  On time would be any time between when you get the bill and the due date.

 

I've never heard of it working any other way.

 

 

[ondreeuh]

No interest if paid in full on time.  On time would be any time between when you get the bill and the due date.

 

I've never heard of it working any other way.

 

Nope - no interest if the statement balance is paid in full on time.**

 

Let's say my billing cycle ends on the 15th. My bank sent me out a statement on the 15th of August showing a balance of $2500, with a payment due date of the 10th of September.

 

During the end of August/beginning of September, I continued to make charges. I go online to pay my bill on September 5th - and my current balance is $3500. I only need to pay $2500 to avoid interest, because that was the balance on my statement.

 

Some banks may forgive a late fee or interest charges if the payment was made after the due date but before the end of the billing cycle, but that's not common.

 

** If you have taken a cash advance, then the interest on cash advances generally accrues daily - so that is an exception. And if you have parts of your balance that are at different interest rates - cash advances, balance transfers, etc. then your payment goes towards your lowest-interest portion first. So a high-interest cash advance will be the last thing to get paid off - and since interest accrues daily, even if you pay your current balance, interest will add up before the payment is applied.

 

[BlsdMama]

On a side note, you might want to tweak when you pay.

 

Let's say that you have a credit card (your only) that has a $5k limit.  You use it for all expenses every month.  Optimally you would want it reporting a balance of 10% or less every month.

 

So, interest aside, you would want to pay it off just before the statement cut date to reflect the amount you are paying accurately to the credit bureau.

Let's say you run up $4k every month and pay it all off every month.

 

Let's say your cut date is the 30th.

If you pay off your bill the very moment it cuts every month on the 1st and then spend, spend, spend and you are maxed on the 30th - it will show your balance on your credit report each month as what the cut balance is - $4k.  It makes you look like you have maxed out cards.

Now, let's say you choose to pay it in full on the 29th of every month.

All of a sudden it looks like you have no debt.  See the difference?

[SparklyUnicorn]

Nope - no interest if the statement balance is paid in full on time.**

 

Let's say my billing cycle ends on the 15th. My bank sent me out a statement on the 15th of August showing a balance of $2500, with a payment due date of the 10th of September.

 

During the end of August/beginning of September, I continued to make charges. I go online to pay my bill on September 5th - and my current balance is $3500. I only need to pay $2500 to avoid interest, because that was the balance on my statement.

 

Some banks may forgive a late fee or interest charges if the payment was made after the due date but before the end of the billing cycle, but that's not common.

 

** If you have taken a cash advance, then the interest on cash advances generally accrues daily - so that is an exception. And if you have parts of your balance that are at different interest rates - cash advances, balance transfers, etc. then your payment goes towards your lowest-interest portion first. So a high-interest cash advance will be the last thing to get paid off - and since interest accrues daily, even if you pay your current balance, interest will add up before the payment is applied.

 

 

Um, I might be a little dense, but I'm not getting how this is different than what I said.  If you make charges during the time between you receive the bill and pay the bill those would be on the next bill and no interest would be charged.  So another way of saying that is if you pay the bill on time you don't pay interest. 

[ondreeuh]

Um, I might be a little dense, but I'm not getting how this is different than what I said.  If you make charges during the time between you receive the bill and pay the bill those would be on the next bill and no interest would be charged.  So another way of saying that is if you pay the bill on time you don't pay interest. 

 

You said "paid in full" which I took to mean pay the account off in full - not just the balance on the statement. The OP was confused about whether to pay the statement balance or current balance, so I clarified.

 

[marbel]

You said "paid in full" which I took to mean pay the account off in full - not just the balance on the statement. The OP was confused about whether to pay the statement balance or current balance, so I clarified.

 

 

I think she meant paying the amount on the statement/bill in full.   If you get a paper bill, that's the full amount.  Online on my accounts, I can choose to pay the "statement balance" or the balance to date.  If I pay the statement balance, I have paid in full.  

[VaKim]

I think she meant paying the amount on the statement/bill in full.   If you get a paper bill, that's the full amount.  Online on my accounts, I can choose to pay the "statement balance" or the balance to date.  If I pay the statement balance, I have paid in full.  

Yes. Sort of. I think. Lol.

I do not get paper bills. Here is what I see when I go to my account online and choose "pay card."

 

Last payment made 8-15-16.

 

Due date: 9-18-16

 

Choices of what to pay:

 

$986.43 (Statement balance as of 8-21-16)

$2,929.00 (Current balance)

 

If I were to pay the "current balance" today, but not make my next payment until the 18th of October (due date), would I end up paying interest on anything we should charge between now and then? This stuff just confuses the heck out of me and I am so afraid of not paying things on time. I had actually signed up for automatic payments, but when it got to the 18th and they still hadn't taken the payment out of my bank account, I canceled and started doing manual payments again because I didn't think it worked or something. 

[marbel]

Yes. Sort of. I think. Lol.

I do not get paper bills. Here is what I see when I go to my account online and choose "pay card."

 

Last payment made 8-15-16.

 

Due date: 9-18-16

 

Choices of what to pay:

 

$986.43 (Statement balance as of 8-21-16)

$2,929.00 (Current balance)

 

If I were to pay the "current balance" today, but not make my next payment until the 18th of October (due date), would I end up paying interest on anything we should charge between now and then? This stuff just confuses the heck out of me and I am so afraid of not paying things on time. I had actually signed up for automatic payments, but when it got to the 18th and they still hadn't taken the payment out of my bank account, I canceled and started doing manual payments again because I didn't think it worked or something. 

  

If you had received a paper bill, the balance due 9/18 would be $986.43.    If you paid that amount, you would be paid in full - no interest charges. That's how it worked before online banking started - pre-internet. You'd get a paper bill, and you'd pay the balance on it.  Most likely there were new charges on the account since the bill was mailed, but you wouldn't see them because - there was no way to look them up.  KWIM?  

 

The difference between $986.43 and $2929 is what you charged after the close date.  Your close date should be visible online, though there might be a different term for it.  I just looked at one of my accounts and it says "your close date will be 9/19/2016."  Anything I charge on 9/20 (and after) will be on the next statement. 

 

If you want to pay the current balance now, that's fine; you won't have any interest charges.  Your next statement will reflect that payment.  

 

If you set up auto payments and the money didn't appear to come out on the due date, it was probably still in process.  Sometimes payments aren't deducted from my checking account till 1 or 2 days later.  If I am worried, I check the credit card and it always says "payment pending."   If the due date falls on a weekend, the payment should be processed on Monday.  

 

For some reason I've never set up auto payments but I do online payments.  I set it up to pay the statement balance (not the current balance) on the due date.  I've never had a payment missed and haven't paid any finance charges.  

 

Disclaimer:  maybe your credit card works differently, but I've had lots of different credit cards and they have all worked the same way.  You could call your credit card company to ask and be sure.   

 

I hope this is clear and helpful!