Credit Card Interest

Question

I already posted a query like this before here and I'm having another problem.

As you can see in the link I provided, the one I marked as the best answer is stating that "You would need to pay the amount specified in this statement by 14th April.".

Now, the current outstanding balance that time is like $428 USD and Minimum Amount Due is $18 USD and I paid an amount of $22 USD last 9/11/2015. When I checked my balance again today, I got an outstanding balance of like $420+ USD again. I thought paying before the payment due data will not add an interest. I don't remember also using my card. Am I doing something wrong on how I am paying? I'm hoping for your solutions. Thank you.

Answer 1

I thought paying before the payment due data will not add an interest.

Paying FULL Amount before the due date will not incur any charges. Payment only the Minimum amount due before the due date will incur charges.

I don't remember also using my card. Am I doing something wrong on how I am paying?

If the full amount due on the last bill [of 21st August] was $ 22 and you have paid, then its fine. If you are wondering why balance of 420 did not get reduced by 22, then there could be some more transactions that appeared late, it generally takes 3-5 days for transactions to show up on credit card after swipe.

Answer 2

To be absolutely clear the credit card issuer isn't giving you the $428 balance that you had for free; they are lending you the money at a rate of interest. Any monies that you still owe them after a payment still continue to accrue interest and interest on the portion of the balance that you paid off as part of the payment accrued interest up to the time that you paid it. Paying the minimum required simply maintains the account and prevents them from charging you fees on top of the interest for not paying the monthly minimum. Any amount paid less than the full balance reduces the balance but does not prevent interest being added based on the remaining balance after that time. It will only prevent interest being added to any amount owed if you have a 0% interest period on some part of the balance (some months free on transferred balances or a month of 0% interest on new purchases are common and used as ways to make you use the card and hopefully have to pay them interest later).

Another reason for the total increasing could be delayed transactions. Depending on the country, the vendor and the day of the week (it is longer at weekends than in the week in the UK) the balance shown online, on bills, or at ATMs may not reflect recent purchases for a number of days as the various accounts settle.

Monthly or annual fees on the account are another potential reason why a balance could rise. Check if there are any fees on the account.

Also check that there are no fraudulent purchases on your account. Whenever any of my balances are not what I expect them to be I audit back to either my last audit or the last time that I remember a correct balance. Even though this is a relatively small amount of money to be conned out of it is still worth checking.

Finally, your country tag is for the Philippines but you give the currency of the debt in USD. If you were paying off a USD debt with PHP (or vice versa) it is possible that a currency movement or transaction fee makes up part of the discrepancy. Check all of the fx rates and costs linked to the account if you are paying off debt cross currencies.

Answer 3

You've probably avoided paying interest, but only on the $22 that you paid before the due date. That's how it works -- anything you pay by the due date is interest-free, any outstanding balance carried forward to the next month is charged interest. To avoid paying any interest, you have to pay off the full balance.