How does your CC charge interest?

[Fat Tone]

I've had Credit Cards for donkeys years, but always pay it off so I've never paid interest.

Last months bill was very large, so I paid 2/3 of it by the due date, leaving £550 which I paid 6 days later. Today I find they charged £20 interest.

Speaking to them on the phone, it seems they charged a full months interest on the entire balance, not 6 days interest on £550. They eventually refunded half of the interest as a goodwill gesture (once I mentioned the dozens of other CC offers I get every month!) but were adamant this is the way it is done.

Do all other companies do this? Call me naive if you wish, but as I said I've never paid interest before - I only use the CC for convenience and to collect airmiles.

TIA

[GNEP]

No idea I'm afraid - pay it off every month in full as well...

[gt40]

They will screw you anyway they can - have a look at your card holder agreeement. Every card is a little differrent, but most will do as your card has done - interest is charge on the full amount if the balance is not completely paid.

[KvHagedorn]

Depends on the company. If you really do get that many offers, I would suggest looking into them and finding one with a lower interest rate. And check to see that they get good reviews online.

[Fat Tone]

That's a fair point if interest is often likely to be a concern. This was a one-off, mostly caused by switching from monthly to a one-off payment for my car insurance and it landing on that months statement with seconds to spare The rest was an insurance claim cheque not arriving when promised

We use this card to gain Airmiles with BMI. We have a family apartment in Spain and use the miles to go there as often as possible, so I'd rather just take my pill and stick with this card

[KvHagedorn]

There is no law that says you must have only ONE card. In fact, having two gives you some flexibility. Also, if one of them gives you the shaft, you can tell them to stuff it and cancel.

[rylan]

Generally I believe they use an average daily balance method, wheras the annual interest rate is divided by 365 for the daily interest rate, and then take the weighted averrage of your balance for the month and multiply that by the number of days in the billing cycle times the daily interest rate. For example, if you had a 600 bill, and you paid 599 of it, you would get charged interest on 600 up until the payment date, then interest in 1 for the remainder of the period.

If you pay the balance in full, then you aren't charged the previous 30ish days interest. However if you leave anything, then you are charged interest on the balance... remember there is a month 'lag' in effect for the interst charge.