Credit Card Interest work if you don't pay out the balance on Due day

[HTG2016]

Hi All ,

I recently got a NAB Premium Credit Card with 60,000 Bonus Qantas Point .
First statement come with a balance of $1790 and due date is 3 June which is 14 days after statement date ( up to 44 days interest free for NAB cards )

My question is let say i can't make it on due date and pay off the whole balance on 10 June which is 7 days late .

Will i get charge interest for :
- 7 days only
- or they will charge me full 44 days + 7 days
- or only in number of days since i made the purchase .

I normally pay off my balance in full by due date but i am short of cashflow this month so not sure how is this work

 

[opusman]

If you don't pay in full by the due date the interest free period is cancelled and interest is back-dated to the date of purchase.

 

[harvyk]

I normally pay off my balance in full by due date but i am short of cashflow this month so not sure how is this work

First of all, what sort of rate are you looking at in interest? Work out how much paying it late may cost and then determine how you will handle it (at a guess you'll probably be looking at somewhere around $40 in interest payments, but I might be wrong).

"Short of cashflow" is what the banks target, my advice would be get it paid, and then get it cancelled. Without going into too much detail, it is very easy to fall into a very bad spiral by just missing out on the interest free periods.

 

[HTG2016]

First of all, what sort of rate are you looking at in interest? Work out how much paying it late may cost and then determine how you will handle it (at a guess you'll probably be looking at somewhere around $40 in interest payments, but I might be wrong).

"Short of cashflow" is what the banks target, my advice would be get it paid, and then get it cancelled. Without going into too much detail, it is very easy to fall into a very bad spiral by just missing out on the interest free periods.

Thanks harvyk for pointing out the late fee as well . looking again at the statement i need to meet the minimum payment of $35.81 by the due date in order to avoid a "late payment fee" . This will be on top of "interest fee" for sure .

If you don't pay in full by the due date the interest free period is cancelled and interest is back-dated to the date of purchase.

Thanks opusman , If that is the case then i need to calculate interest from the date of purchase .

Good to know exactly how much interest i need to pay if i don't pay the balance exactly on the due date .

 

[opusman]

Another gotcha is that once you've they've started charging interest you won't get your interest free period back again until the balance is completely paid off (i.e. down to $0 owing including any interest you've accrued). So when you do come to make the full repayment, make sure you call them to find out what the total accrued interest is (or just pay a bit extra to compensate).

 

[MEL_Traveller]

Another gotcha is that once you've they've started charging interest you won't get your interest free period back again until the balance is completely paid off (i.e. down to $0 owing including any interest you've accrued). So when you do come to make the full repayment, make sure you call them to find out what the total accrued interest is (or just pay a bit extra to compensate).

I thought it was actually worse than that? Even if you pay off the balance in full, your interest free period doesn't start again until the next billing cycle? For example, you are late this month, it doesn't matter if/when you pay in full, you'll still keep accruing interest until the end of this cycle? you interest free period starts next month (assuming full payment). At least that's the way it works with some credit cards. YMMV.

 

[opusman]

Fudnamentally you have to have a $0 balance (with no unbilled interest) at the end of the statement period to reactivate interest free for the next month. But some (most/all?) cards will also reactivate it if you make two on-time payments in a row. They effectively defer billing the interest for the second month to your account until the due date - so if you pay before that, the interest never gets billed and the interest free period reactivates.

So I think there are two ways you can generally reactivate the interest free period:

- Either pay the full closing amount for two consecutive monthly statements, or
- Pay enough to cover the outstanding balance, plus any accrued unbilled interest, and then not use that card again until the next statement period.

 

[MEL_Traveller]

Fudnamentally you have to have a $0 balance (with no unbilled interest) at the end of the statement period to reactivate interest free for the next month. But some (most/all?) cards will also reactivate it if you make two on-time payments in a row. They effectively defer billing the interest for the second month to your account until the due date - so if you pay before that, the interest never gets billed and the interest free period reactivates.

So I think there are two ways you can generally reactivate the interest free period:

- Either pay the full closing amount for two consecutive monthly statements, or
- Pay enough to cover the outstanding balance, plus any accrued unbilled interest, and then not use that card again until the next statement period.

yes - that's what i thought. Simply paying off the balance in full during an outstanding statement period won't give you back interest free just yet. you have to wait until the next cycle.

 

[theblank]

credit card interest are like an unflushable.

Once you get one, you got to stop using it until its all gone, and then some.