To ask how credit card interest works?!

[Pullyers]

I have for the first time got a credit card! I know it's odd but have always been a saver and a bit afraid of them / debt as my parents were constantly broke etc. When you make a purchase am I right to say that if you pay it off within a month of the date of purchase then you don't pay interest? I'm confused as some places say you must pay off before the due date of payment but that doesn't make sense because you could purchase something the day before the min payment is due?! I'm assuming as long as you pay off within a month from the date you spend then you don't pay interest. Is this correct?! Thanks!

As long as you pay your bill in full every month you won't pay any interest. So for instance : if your bill arrives on say the 10th of the month and tells you the payment due date is 30th of that month any new purchases you make after the 10th would go on your following months bill.

No, you get longer than that. After a month of purchases, you will get a statement with a due date for payment (which will be within a month of the statement date) - if you pay off the balance on the statement in full by the due date then you pay no interest. So for some of your purchases the time between the purchase and actually paying for it could be nearly two months.

You can set up a direct debit with the card provider to ensure bill is paid in full each month, and you would then avoid paying any interest.

There is a cut off date for each statement, so say your statement date is the 21st of the month, then your payment date might be the following 15th.

If you buy something on the 20th May, it will appear on your May statement and you will have to pay off the whole May balance by the 15th June to pay no interest.

If you buy something on the 22nd May, or the 14th June (for your example) that will go onto your 21st June statement and you will have until 15th July to pay it off to be interest free.

Does that help? Hope I've explained it OK.

You can usually set up a direct debit to take the whole statement balance (or the minimum) if you're worried. I have mine set up to take the minimum just in case I forget, but usually pay it all off on my banking app before the DD is due to go out.

Hi Op I worked in a credit card department for a bank for years so hopefully this helps you.

You are right that you have about a month normally to pay things off ( CC fine print will say you will have upto 56 days) its not really to do with your payment date but your statement print date. An example is if your statement date is the 10th with a payment date of the 28th that month anything you spent before the 10th and in previous months will have to be paid off by the 28th to avoid interest. Anything you spent after the 10th won't actually be on a statement until the next month and you will have a month and a half to pay it off. Hope this makes sense

You will get a statement of all your purchases on a set day of the month. Pay it in full and you'll pay no interest. If your statement is due on the 15th, you'll have a date on it by which it must be paid to avoid interest, say the 5th of the following month. So if you buy something on the 12the June, it probably wont make it on your June statement, it won't appear until 15 July, so won't have to be paid until early August. All interest free.

My "no" was to OP - cross-post with Wonderwoman.

Just looked at my last bill and it has purchases made 7 May - 4 June, and payment is due 1 July. Anything I bought after 4 June won't have to be settled until 1 August.

One word of warning: don't use a credit card to get cash (eg out of an ATM, or to buy currency) because interest gets charged straightaway on that.

Thanks so much everyone, totally understand now! Thanks again.

But if you don't clear the balance each month, then the interest applies from the original transaction dates (I think), and you will then see interest appearing on the statement after the balance is fully cleared. As credit cards charge about 2-3% a month, it represents a relatively expensive way of borrowing (but not in comparison to a pay day loan)

I think that's right - I have a direct debit set up to make sure I always pay mine off.

The best card I have is barclaycard. The online app is brilliant.

Also always pay more than the minimum balance (preferably the full amount). The more you pay the less interest you accrue.we use ours for big purchases to have protection, holidays etc always go on the card then get paid ASAP.

Further to DadDadDad's post, it's not just cash withdrawals that attract instant interest. You'll have to check with your card provider because they are all different, but as well as ATM cash and foreign currency purchases, some gambling/lottery websites and even buying a gift card can be treated as a cash withdrawal by some card providers.

I found this out when I bought some travel money on my card, and had no idea that it was going to apply instant interest.