# Credit Card Interest Calculation Question



## PaMike (Dec 7, 2013)

Ok, gota credit card question someone must know the answer to...

So I have a credit card, NORMALLY it is paid off every month so interest charges are normally a non issues, however this past month I screwed up...

Last month my statement came, $1200.00. I cut a check for $1000 by mistake, and shorted the company $200 so I had a balance of $200 carryover.

Now this months statement comes. I had $5500 in purchases plus $200 in carry over from my error the month before. I assumed they would charge me interest on the $200 that carried over from last month, but NO they charged me 16.45% interest on the entire amount of $5700!! Comes to $77 in interest!!.

I assume that once you carry a balance from one month to the next the card company automatically starts charging you interest for your entire balance not just the carry over????

Any input? I am kinda pissed. Guess I will call the card company and threaten to close the card.


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## IHCman (Aug 27, 2011)

I recommend calling them and asking them about it. If they don't budge and you politely tell them you'll cancel the card, they'll probably bend over backwards to keep you from canceling.

A friend told me to call the company when I forgot a $75 payment and I was mad at myself because I was going to get late lee and interest. Friend said to call and explain and they'll usually waive it if its the first time. They did.


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## Teslan (Aug 20, 2011)

PaMike said:


> Ok, gota credit card question someone must know the answer to...
> 
> So I have a credit card, NORMALLY it is paid off every month so interest charges are normally a non issues, however this past month I screwed up...
> 
> ...


It is probably buried in the fine print somewhere that you didn't read because it doesn't matter since you pay it off every month. I never have read the fine print of my credit cards either. Also I'm a little confused. 16.45% of 5700 is like $938? You mean your APR of 16.45%?


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## Tx Jim (Jun 30, 2014)

Ditto on calling credit card company. If one doesn't call & pays the $77 then CC company is $77 better off. I'll bet you call & they'll cancel the charge. I'll guarantee you that I would call my CC hotline.


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## rjmoses (Apr 4, 2010)

Simple: They're charging you the 16.45% APR on the full outstanding balance which = $938 / 12 months = $78.

Pretty good deal --- for them! Call for adjustment; cancel if they don't.

IMHO, Credit cards are the biggest scam to come along in years.

Ralph


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## RockmartGA (Jun 29, 2011)

PaMike said:


> I assume that once you carry a balance from one month to the next the card company automatically starts charging you interest for your entire balance not just the carry over????


Yep, you are correct. Credit card companies are sneaky bastards and they use several tactics to separate you from your money.

My favorite is when they offer 0% interest on purchases and give you 12 or 24 months to pay it back. What most people do not realize is they accrue interest on that balance and if you are ever late with a payment, all that interest gets put back on the account and you must pay the interest on the entire time you kept the balance.

Found that one out the hard way. Home Depot had one of those 0% deals and I bought a bunch of lumber to redo a deck. I was doing real good making the payments until the very end and I slipped up and was a few days late with my payment. Next month, all that accrued interest was now part of the balance that I owed. I cussed and fussed about it, still cost me several hundred dollars. Lesson learned (the hard way).


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## Teslan (Aug 20, 2011)

rjmoses said:


> Simple: They're charging you the 16.45% APR on the full outstanding balance which = $938 / 12 months = $78.
> 
> Pretty good deal --- for them! Call for adjustment; cancel if they don't.
> 
> ...


Chase called a couple years ago and informed me I was using credit cards how they are supposed to be used by paying them off every month. Well true I'm sure they would rather me pay some interest. Especially when they give 2% back. I now keep getting emails from Chase that I should call them to update my income with them so they can better serve me with lines of credit and other services. No thanks. When I offered all that for a line of credit they didn't want to deal with me as they don't service ag banking.


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## swmnhay (Jun 13, 2008)

RockmartGA said:


> Yep, you are correct. Credit card companies are sneaky bastards and they use several tactics to separate you from your money.
> 
> My favorite is when they offer 0% interest on purchases and give you 12 or 24 months to pay it back. What most people do not realize is they accrue interest on that balance and if you are ever late with a payment, all that interest gets put back on the account and you must pay the interest on the entire time you kept the balance.
> 
> Found that one out the hard way. Home Depot had one of those 0% deals and I bought a bunch of lumber to redo a deck. I was doing real good making the payments until the very end and I slipped up and was a few days late with my payment. Next month, all that accrued interest was now part of the balance that I owed. I cussed and fussed about it, still cost me several hundred dollars. Lesson learned (the hard way).


Another one they do that a friend got hooked on was 12 months free.Well he got a card at TSC and bought $2000 of fencing.He used the card a couple months later for $200 and when he got the next bill he pd the $200.Well the 200 went towards the first charge so he gets the next bill and he is over due on the 2nd charge of $200 and gets hit with interest plus some other fees.

One time I made my payment and screwed up paying $555.57 instead of $555.59 so under pd .02.Got $35 in fees on the next bill.Gave them a call and said you got to be kidding me $35 for a mistake of .02.They did wave all the fees.Since then I always wear my glasses doing bills,lol.


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## RockmartGA (Jun 29, 2011)

swmnhay said:


> Another one they do that a friend got hooked on was 12 months free.Well he got a card at TSC and bought $2000 of fencing.He used the card a couple months later for $200 and when he got the next bill he pd the $200.Well the 200 went towards the first charge so he gets the next bill and he is over due on the 2nd charge of $200 and gets hit with interest plus some other fees.


Yep, yet another trick they use to get into your pocketbook.

The 0% financing deal can be very useful. You just have to know the rules and be extremely vigilant about making the payments. You have to have a $0 balance, make the purchase for the interest free financing, and put the card in the desk drawer and do not use it again until you pay it off.


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## PaMike (Dec 7, 2013)

The thing that blows me away is that from the statistics A LOT of Americans carry LARGE balances from month to month on their card...that means they never pay the balance off each month so they then get sucked into interest accruing as soon as the purchase is made like I did, not just on the outstanding balance...HOLY CRAP... assume someone has 5k on their card, like I did this month...they are paying $80 EVERY MONTH in interest...WOW...that's a lot of money for joe average homeowner...


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## woodland (May 23, 2016)

We carry cards and run everything we can through them for the cash back. One time we slipped up and missed a month and my wife called and they credited the interest on the next months statement. Quite happy about the way it went.


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## SCtrailrider (May 1, 2016)

I'm glad we don't own a single plastic card, cash or it doesn't come home... but then again we aren't on the scale most of you are.. no bills does let me sleep better tho.....


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## deadmoose (Oct 30, 2011)

Yup. People are stupid. And buy stuff they cannot afford. And pay a lot of interest. Many do not know how or care to do the math.

I remember a handful of years ago wondering how everyone affords their McMansions. I finally came to the realization that most really cannot. They are mortgaged to the hilt. They probably make as much money as me give or take. But they don't save. Or ever pay things off. Always have a car payment. Refi here and there...

Thats what I have concluded. With a few exceptions.


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## RockmartGA (Jun 29, 2011)

Credit is a lot like fire.  Use it wisely and you can accomplish great things. Unwisely, and it can destroy you.

One of the best things you can do for your children is to teach them the concept of compound interest. I've seen too many young adults walk into the credit trap and the worst culprits - even worse than credit cards - are student loans, IMHO.


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## r82230 (Mar 1, 2016)

You may (or may not) have gotten hit with the average daily balance (were they use two months debits in their calculations). This is why I suggest using two cards (switching usage month to month), so if you screw up and don't pay the entire balance on a card, the next month they can't add to it to calculate the interest.

It's all in their 'fine' print of those little folded up pieces they send to you time and time again (and if you think the changes are in your favor, good luck). So even if they had one arrangement when you opened your account, chances are it has been changed.

But as others have said, make the call, they don't want to lose a customer (unless you are a dead beat, like Tes not paying any interest, how are they supposed to stay in business, Tes? :lol.

Lastly, if you ever get one of those zero percentage deals, I would suggest you make the payments, one month in advance. So you can see that the payment was applied (had a friend learn the hard way on that one, he is still cussing).

Larry


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