Quick credit card payoff question

[Skeeedunt]

How much do I need to pay in order to stop incurring interest on new charges? Last statement balance, current balance, current balance + $xxx, something else?

These are all standard purchases, no cash advances or anything else that I know of, if that matters.

Thanks all.

Edit: Should have mentioned - I've been carrying a balance on this card for a while now.

 

[ungsunghero]

Assuming you weren't carrying a balance at the end of the previous statement, you'd have to pay the last statement balance to avoid finance charges.

You could pay more (up to the current balance) if you wanted to.

 

[KoolAidKid]

Call them and ask for the payoff amount.

 

[erub]

wow..just wow

Last Statement Balance

 

[dullard]

Originally posted by: erub
wow..just wow

Last Statement Balance

In many, many cases, doing that will NOT stop incurring interest. This is especially true if two statements ago there was a balance and the CC company does the billing that requires TWO statements in a row to be paid off in full.

This will be tough, but the only way to be certain is to pay off (what you didn't pay last month) + (what you charged this month) + (fees) + (interest) + (to be sure another chunk of whatever you can afford). It is always ok to overpay.

 

[Skeeedunt]

Originally posted by: ungsunghero
Assuming you weren't carrying a balance at the end of the previous statement, you'd have to pay the last statement balance to avoid finance charges.

You could pay more (up to the current balance) if you wanted to.

Sorry, should have clarified... I've been carrying a balance for a while now, that's why I wasn't sure.

 

[Skeeedunt]

Originally posted by: dullard
In many, many cases, doing that will NOT stop incurring interest. This is especially true if two statements ago there was a balance and the CC company does the billing that requires TWO statements in a row to be paid off in full.

This will be tough, but the only way to be certain is to pay off (what you didn't pay last month) + (what you charged this month) + (fees) + (interest) + (to be sure another chunk of whatever you can afford). It is always ok to overpay.

Thanks, I thought it was something like that. The extra chunk should just be roughly enough to cover recent interest, correct? e.g. if interest for the entire month would turn out to be ~$20, paying an extra $25 now should be sufficient?

 

[ungsunghero]

Originally posted by: Skeeedunt

Originally posted by: ungsunghero
Assuming you weren't carrying a balance at the end of the previous statement, you'd have to pay the last statement balance to avoid finance charges.

You could pay more (up to the current balance) if you wanted to.

Sorry, should have clarified... I've been carrying a balance for a while now, that's why I wasn't sure.

In that case, even if you pay the entire current balance, you may still incur a small finance charge on your next statement (since you would have carried a balance for a number of days after your previous statement closed).

dullard's right about the "two statements" rule. Usually, if you're carrying a balance, you will end up getting hit with ~ 2 months' worth of extra finance charges after you think you've paid off the balance in full.

 

[dullard]

Originally posted by: Skeeedunt
Thanks, I thought it was something like that. The extra chunk should just be roughly enough to cover recent interest, correct? e.g. if interest for the entire month would turn out to be ~$20, paying an extra $25 now should be sufficient?

If you've been running ~$20 in interest, adding an extra $25 would probably cover it.

The last thing you want to do is to just pay off what the statement says. Pay more. If you use the CC next month, you just prepaid next month. If you never use it again, they'll just mail you the extra back. Either way, you end the CC interest.

 

[Skeeedunt]

Alright, sounds good to me. Thanks all!

 

[SoulAssassin]

In most cases you'll encounter what's called "retail residual finance charges" and you'll get a statement with a few dollars in interest. Basically, you are accumulating finance charges on a daily basis and you get a grace period at the end but you carried a balance from the date your statement was issued to the day it was paid off. As previously mentioned, call for a payoff figure.

If you want to calculate it, it goes something like this. Estimate the day your payment will hit as best as you can. Calculate the number of days between the last statement cycle date and the payment date. Assume your rate is 20% for the sake of argument and your balance is 10K as of last statement and it's been 15 days. Two cycle method is calculated differently.

((.2/365)*15)*10000

 

[ebaycj]

Originally posted by: KoolAidKid
Call them and ask for the payoff amount.

FTW. Also, you can probably do the actual payment over the phone while you have the CSR on the line.

 

[ebaycj]

Originally posted by: Skeeedunt
How much do I need to pay in order to stop incurring interest on new charges? Last statement balance, current balance, current balance + $xxx, something else?

These are all standard purchases, no cash advances or anything else that I know of, if that matters.

Thanks all.

Edit: Should have mentioned - I've been carrying a balance on this card for a while now.

The way I did it was to pay the "current balance" at the beginning of a month, then wait for it to post. Then after it posted, pay off the remaining $50 or so before the next statement starts.

 

[ungsunghero]

Originally posted by: SoulAssassin
In most cases you'll encounter what's called "retail residual finance charges" and you'll get a statement with a few dollars in interest. Basically, you are accumulating finance charges on a daily basis and you get a grace period at the end but you carried a balance from the date your statement was issued to the day it was paid off. As previously mentioned, call for a payoff figure.

If you want to calculate it, it goes something like this. Estimate the day your payment will hit as best as you can. Calculate the number of days between the last statement cycle date and the payment date. Assume your rate is 20% for the sake of argument and your balance is 10K as of last statement and it's been 15 days. Two cycle method is calculated differently.

((.2/365)*15)*10000

Cool. I never knew there was actually a term for this.

 

[SoulAssassin]

Originally posted by: ungsunghero

Originally posted by: SoulAssassin
In most cases you'll encounter what's called "retail residual finance charges" and you'll get a statement with a few dollars in interest. Basically, you are accumulating finance charges on a daily basis and you get a grace period at the end but you carried a balance from the date your statement was issued to the day it was paid off. As previously mentioned, call for a payoff figure.

If you want to calculate it, it goes something like this. Estimate the day your payment will hit as best as you can. Calculate the number of days between the last statement cycle date and the payment date. Assume your rate is 20% for the sake of argument and your balance is 10K as of last statement and it's been 15 days. Two cycle method is calculated differently.

((.2/365)*15)*10000

Cool. I never knew there was actually a term for this.

I worked for a credit card company for 8 years so it might be a term just used internally.

 

[jadinolf]

Originally posted by: KoolAidKid
Call them and ask for the payoff amount.

Yep, I bet they would know.

 

[RossMAN]

Originally posted by: Skeeedunt

Originally posted by: ungsunghero
Assuming you weren't carrying a balance at the end of the previous statement, you'd have to pay the last statement balance to avoid finance charges.

You could pay more (up to the current balance) if you wanted to.

Sorry, should have clarified... I've been carrying a balance for a while now, that's why I wasn't sure.

Then I would definitely call your cc customer service (OMG HUMAN INTERACTION!!!! DANGER DANGER!!!) and ask for a 10 payoff quote.

DO NOT ASK FOR YOUR BALANCE. Ask for a payoff including all accrued finance and other charges.

 

[Skeeedunt]

Ok, done and done. The lady said she couldn't give me an exact number because she didn't have the math skills to compute the daily interest

I'll add an extra $20 on top of her estimate and I'm sure all will be well. Thanks again guys.

 

[RossMAN]

Originally posted by: Skeeedunt
Ok, done and done. The lady said she couldn't give me an exact number because she didn't have the math skills to compute the daily interest

That's total B.S. and not acceptable. I would have escalated the call to her supervisor.

Originally posted by: Skeeedunt
I'll add an extra $20 on top of her estimate and I'm sure all will be well. Thanks again guys.

Or you could just overpay :thumbsup:

 

[manlymatt83]

Originally posted by: KoolAidKid
Call them and ask for the payoff amount.

QFT. You can calculate this yourself, but its just easier to have them do it.

 

[jamesbond007]

Originally posted by: Skeeedunt
Ok, done and done. The lady said she couldn't give me an exact number because she didn't have the math skills to compute the daily interest

That sounds like BS - probably playing the ignorant card to keep you out of the know.

Calculating Effective Interest Rates

 

[Skeeedunt]

Certainly seemed like an odd response, I wasn't really sure what to say.

Apparently you can't overpay online, so I guess I'll just send them a check.

Just to make sure I understand - once the check clears, and my balance shows $-xx.xx, it's ok to start using the card immediately and I'll be interest-free as long as I pay it off every month?

 

[SoulAssassin]

Originally posted by: Skeeedunt

Just to make sure I understand - once the check clears, and my balance shows $-xx.xx, it's ok to start using the card immediately and I'll be interest-free as long as I pay it off every month?

You usually have to wait for your statement to cycle.

 

[dullard]

Originally posted by: Skeeedunt
Just to make sure I understand - once the check clears, and my balance shows $-xx.xx, it's ok to start using the card immediately and I'll be interest-free as long as I pay it off every month?

If I were you, I would wait until you get a statement with $0.00 interest being charged. Do that just to be extra careful. Use your spare CC that you have only for emergencies in the mean time.

Or did you not get my repeated memos on ATOT to have a spare CC with nothing charged on it?

 

[Night201]

Listen to some of these.