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(4.80 out of 5) (4.67 out of 5) (4.50 out of 5)Credit card and finance computations can make your head spin, we have developed common calculators to assist you.
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The billing period is the time period between the last statement date... ...more
Question: I feel like I am paying more interest than I should be on my credit card. Why is that?
Answer: This is a practice of credit card companies that many people are not aware of, and it involves partial payments of the balance on your card. When you do anything less than pay the balance in full by the due date on the bill, the credit card issuer charges you interest on the full amount of the bill. For example, imagine the balance due on your current bill is $1000. However, you have most but not all of the money to pay it off, so you send a payment of $900. You feel pretty good about this, as you’re now paying interest on only $100, right?
Unfortunately, that’s not the case- even though you paid off most of the debt, the credit company is going to calculate the interest based on the full balance due at that billing, or $1000 in our previous example. Therefore, any time you make less than a full payment, you are being charged as much interest as possible by the credit card company. This underscores the importance and good sense of keeping your credit cards paid off- then you aren’t paying any interest at all!
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