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Q: When I first began utilizing credit cards, I’d pay the whole balance a day beforehand so that it’d not be late. However then I understood that if I remained to utilize my charge card later that day, it’d develop a balance that’d roll over and get charged interest if I did not pay it off the next day. Right?
I pay my balance completely monthly, but even now when I pay it on the day it’s due, my account constantly tells me later on that there’s a “balance last statement” of some random quantity and I cannot determine what that suggests. Thankfully my APR is 0 % for the first year, however I am stressed about exactly what it indicates for me in the future in terms of interest or late costs.
– Laura L.
A: To answer your first question: no, you won’t be hit with interest charges, yet.
When you make that credit card repayment, you’re spending for purchases made throughout the previous invoicing cycle. The investment that’s made after the payment counts towards the current invoicing cycle and it will show up in your next statement. Settle the statement balance and you won’t go through interest fees.
As for the second concern, you are most likely prepaying your account balance by manually picking to pay the “existing balance” instead of the “statement balance.” By paying the “existing balance,” you are settling your last statement’s balance and a portion of the balance that built up since the last billing cycle ended.
Take this circumstance for instance:
- April 1: Billing cycle 1 starts (beginning balance of $0).
- April 2: Charge $500 in purchases.
- April 20: Make $500 repayment (“existing balance”).
- April 30: Charge $100 in purchases. Invoicing cycle 1 ends (ending balance of $100).
- May 1: Invoicing cycle 2 begins. (starting balance of $100). Month-to-month statement is received for $100 balance.
- May 2: Charge $500 in acquisitions.
- May 20: Make $600 repayment (“existing balance”).
- May 21: Statement balance for billing cycle 1 ($100) is due, but balance is currently $0.
- May 30: Charge $100 in purchases.
- May 31: Billing cycle 2 ends (ending balance of $100).
Since you’re currently paying more than you need to, you won’t have stress over interest. If you want to continue to use this payment method, there’s absolutely nothing to actually worry about. Nonetheless, it’d be much simpler to take note of the numbers if you establish automatic payments to pay off the “statement balance.”
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