Here's what I have :
Total Balance : X
Balance Due : X-500
Minimum Payment : 50
If I pay X-500, will I pay zero interest on that month? Or will I pay interest for the remainder of what's left on my credit card account?
I haven't encountered this situation yet as I always pay in full. I just wondered if I could save a bit more by paying only the Balance Due.
The "balance due" is the balance at the end of the last billing period. This is the amount that you need to pay by the due date to avoid any interest charges.
The "total balance" includes purchases that have occurred in the current billing period, after the last billing period has closed. If you were looking at a paper statement, you wouldn't see this balance, because it includes transactions that happened after the statement was printed. The payment for these transactions won't be due until the after the current billing period has ended.
As long as your credit card has an interest free period (usually between 40 to 60 days) you will pay no interest if you pay the full balance due by the due date for that period. Any remaining spending on the card has been done in the new period which will be due as part of your next statement.
If you are making payments by EFT make sure you make the payment a couple of days before hand to make sure the payment is received by the card provider by the due date, or else they may charge you interest if the payment comes in late and you will continue to pay interest until the full balance is paid off and not just the balance due.
I have a credit card where I do this. I use it very often because it has high rewards on restaurants, so I'm constantly carrying a balance. The card is set up to automatically pay the statement balance every month. As a result, when the payment goes through, there is always a balance left (the charges that came after the statement).
I have monitored this card closely since I opened it last year to ensure that this would result in no interest charges, and it hasn't.
As Victor points out, this is due to a period of time on this card (true of many but not all cards), which is often referred to as a grace period. The "40 to 60 days" he quoted is from the time of purchase. The credit card company will give you a number of days from the close of each billing period, typically about 25 days, to pay the statement balance and avoid interest. Since your purchase could be made at any point in the billing period, the amount of time you have from purchase varies.
It's important to note that this may not apply if you are already carrying a balance that is being charged interest. If this is the case, check the terms very carefully. Often this means that interest accrues from day 1 (the day of the purchase). If in doubt contact a representative and ask specifically about your situation.
Since you mentioned that you are paying off the balance in full, you are probably not paying interest at the moment.
On a personal note, I was also paying all cards in full if they had any balance, and I found it very freeing to have the statement balance paid automatically. I still pay no interest, I don't have to worry about making manual payments, and I reduce a tiny bit of opportunity cost.
if your Outstanding balance is 16,000 and your minimum payment due is 600.00 and let's say your due date is on the 27th of each month and you pay in the amount of 16,000 even on your due date then you should no longer be charged for the minimum payment due (which is 600.00 interest)
