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Q: I simply recently settled a $700 balance at Capital One in full to a $0 balance. All of a sudden 3 days later on, I review my statement that maybe they raised my credit line. No! Now, I’ve a $11.35 cost on my account that’s no reason or source to be there. No charges, no transactions, absolutely nothing. What’s this ghost balance?
– Seth H.
A: Seth, first off, great task on ridding yourself of this particular credit card debt.
The “ghost balance” that you are referring to is called residual interest. You sustained these interest charges due to the fact that your now-paid-off balance wasn’t under the grace period. As a result, you are still responsible for interest charges on the balance up till the day that the balance was settled.
Your situation could be much better off discussed with an example:
Let us say that your billing cycle starts on the 15th each month and ends on the 14th of every month.
On June 15, you’d the $700 balance carried over from the previous month. Then, you settled the balance on June 25. You make nothing else purchases and no other deals take place on your card. Although you wind up with a $0 balance on July 14, you still need to spend for the 10 days of interest on the $700 balance, which is exactly what appeared on your statement.
Here’s what the card disclosure for a Capital One charge card states:
Your due date is at least 25 days after the close of each billing cycle. We’ll not charge you interest on new investments, offered you’ve paid your previous balance in full by the due date each month.
So any balance that continues to be after this 25-day moratorium will be subject to interest up until the day it’s settled.
Residual interest outcomes when you start the billing cycle with a balance. If you’d a $0 balance on June 15, but made $700 in brand-new purchases and paid it off prior to the moratorium ended, you wouldn’t deal with any interest costs.
You’ll stop seeing interest costs after keeping a $0 balance for 2 consecutive invoicing cycles.