Credit Card Interest Calculation

[Hero_X]

Hey guys,

So I need some help understanding credit card interest, as I'm a total dumbass. I forgot to make a payment and was 3 days late. So they're charging me interest for the full balance, but interest from the date the statement started to the date the full balance was paid. Is this how it works? I was thinking I would get charged from the day the statement is due to the day I paid the balance in full.

I know my credit card has an annual rate of interest of 20%, which I thought would mean a daily interest of 0.0548% (20/365).

so shouldn't it be 0.0548 x balance x number of days (after statement is due) ? :nut:

fck I have no idea because I always pay my balance in full. Plz help!

[Disoblige]

Call them right away and tell them the situation. If you are a long time customer in good standing, they can reverse this charge for you as a one time thing.

[roopi]

Originally posted by Disoblige
Call them right away and tell them the situation. If you are a long time customer in good standing, they can reverse this charge for you as a one time thing.

Do this it works.


As for there calculations they are right and you are wrong. :D

[Hero_X]

I did call and the bitch on the phone just gave me this explanation and told me to fck off pretty much.

I am a customer in good standing and have been with these bastards for years but still this bitch didn't do shit to help.

I guess I can try to call back.

[Mario38]

Originally posted by Hero_X
I did call and the bitch on the phone just gave me this explanation and told me to fck off pretty much.

I am a customer in good standing and have been with these bastards for years but still this bitch didn't do shit to help.

I guess I can try to call back.

Call back and hopefully you get a better person on the line. Tell them you are switching credit card companies if they do not help out "just this once".

I have always believed the way they calculate the interest charges is against the law since the "effective rate" is higher than allowed by the Act governing interest rates. Often referred to as the usury law.

Unfortunately you would have to have deep pockets to fight this and your only incentive is to win on principle.

I have wondered if it would work in civil court and then the ruling, if in your favor, would set a precedent that affected all credit card companies operating in Canada.

[carson blocks]

Originally posted by Mario38

I have always believed the way they calculate the interest charges is against the law since the "effective rate" is higher than allowed by the Act governing interest rates. Often referred to as the usury law.

Unfortunately you would have to have deep pockets to fight this and your only incentive is to win on principle.

I have wondered if it would work in civil court and then the ruling, if in your favor, would set a precedent that affected all credit card companies operating in Canada.

The usury law in Canada caps rates at 60%, over twice the average credit card rate. How do you get a higher than 60% APR from your calculations?

Oh, and OP, they probably won't do anything for you. For guys like us that pay our cards off all the time, this is their rare chance to make something from us. Especially if it's a good rewards card, they know you won't move because of one bill that's really your fault. I'd just suck it up and pay it, it's the price for forgetting to pay a bill, and hits the best of us every now and then.

[Mario38]

Originally posted by carson blocks


The usury law in Canada caps rates at 60%, over twice the average credit card rate. How do you get a higher than 60% APR from your calculations?

...



The real interest rate should be based on being 3 days late. They justify by saying the first "30" days were a grace period, but as a penalty for being late, they remove the grace period.

Companies do not have the authority to impose fines. Only the courts have that authority.

This can be won in court just like the Pay Day loan companies lost in court. Their practice was to charge a 30% interest rate and then tack on a $50 admin fee. The courts ruled the admin fee was part of the interest and when rolled in, sent the effective interest rate above 60%.

[carson blocks]

I agree credit card companies are predatory, but I don't believe they're acting contrary to the law.


Originally posted by Mario38


The real interest rate should be based on being 3 days late. They justify by saying the first "30" days were a grace period, but as a penalty for being late, they remove the grace period.


They lent you the money 30 days ago when you borrowed the money and made the purchase, not starting when payment was due. Interest is calculated from the day you borrow the money, if you choose to be responsible and settle up when billed, they give you that 21 or 30 day grace period with no interest.


Originally posted by Mario38


Companies do not have the authority to impose fines. Only the courts have that authority.

It's not a fine, it's fairly calculated interest that you agreed on when you signed up for the credit card. And companies absolutely do have the right to impose fines when you agree to it beforehand in a contract. It happens across many industries every single day.




Originally posted by Mario38
This can be won in court just like the Pay Day loan companies lost in court. Their practice was to charge a 30% interest rate and then tack on a $50 admin fee. The courts ruled the admin fee was part of the interest and when rolled in, sent the effective interest rate above 60%.

I believe the key difference is that you can use a credit card product your entire life without paying a dime of interest, where the payday loan 'fee' was for borrowing the money and was unavoidable whether you paid as agreed or not, making it part of the loan cost. The short term nature of payday loans means that when annualized, a loan plus the fees would equal more than the allowed 60%.

I don't believe this has any chance in court, as they are acting within the terms of their cardholder agreements, and within Canadas usury laws.

[Mario38]

Contracts are void when they break the law.

[carson blocks]

Originally posted by Mario38
Contracts are void when they break the law.

But they haven't. They are charging you interest from the day you start using their money, as you agreed to when you took the card. Calculated like that, at no point does it come anywhere near 60%.

[Mario38]

Originally posted by carson blocks


But they haven't. They are charging you interest from the day you start using their money, as you agreed to when you took the card. Calculated like that, at no point does it come anywhere near 60%.

We obviously disagree.

My point is, I believe a good lawyer could get a judge to rule the credit card companies are breaking the law.

[bjstare]

Originally posted by Mario38


My point is, I believe a good lawyer could get a judge to rule the credit card companies are breaking the law.

Yeah, this could be revolutionary. I bet no one has thought about it before. Especially the credit card companies who have hundreds of millions of dollars at stake
:rolleyes:

[Disoblige]

Originally posted by Mario38

Call back and hopefully you get a better person on the line.
Yeah, call again. Hopefully you get a better person on the line. Talk to the supervisor if they feed you some BS that they can't do it. They certainly can, just if they want to or not.

[Amysicle]

.

[Mitsu3000gt]

Once you miss the pay deadline, they charge you interest starting on the transaction date for each line item - not starting after the due date for the whole bill. So the instant it's late, you have 30-40 days of interest instead of 1 or 2.

Just call them, if it's a good company they will reverse it if it's a one-time thing. I've done this before when I missed my bill by one day and got whacked by a bunch of interest.

[lasimmon]

At least you understood the due date.

My GF thought you pay interest all the time so she paid her credit card every day :banghead:

[Mitsu3000gt]

Originally posted by lasimmon
At least you understood the due date.

My GF thought you pay interest all the time so she paid her credit card every day :banghead:

I know people who just pay the ~20% CC interest every month, but refuse to go get a ~5% LOC from the bank :rofl: It's astonishing really.

[bjstare]

Originally posted by Mitsu3000gt


I know people who just pay the ~20% CC interest every month, but refuse to go get a ~5% LOC from the bank :rofl: It's astonishing really.

Some people are just not as smart as others. Take a look at some of the posts in this thread :rofl:

[kenny]

Originally posted by lasimmon
At least you understood the due date.

My GF thought you pay interest all the time so she paid her credit card every day :banghead:

Nothing bad with paying it off everyday, even if its for the wrong reason :rofl:

I transfer funds to my CC to clear it every other day. I pretty much use it as a debit card but just want the points. I have terrible memory so if I didn't do this I'd probably get nailed with interest penalty every other month.

[lasimmon]

Originally posted by kenny


Nothing bad with paying it off everyday, even if its for the wrong reason :rofl:

I transfer funds to my CC to clear it every other day. I pretty much use it as a debit card but just want the points. I have terrible memory so if I didn't do this I'd probably get nailed with interest penalty every other month.

I explained to her that you could invest the money instead and come out ahead.

I actually set a monthly reminder in my work calander to remind me that I need to pay it.

[TomcoPDR]

Originally posted by kenny


Nothing bad with paying it off everyday, even if its for the wrong reason :rofl:

I transfer funds to my CC to clear it every other day. I pretty much use it as a debit card but just want the points. I have terrible memory so if I didn't do this I'd probably get nailed with interest penalty every other month.

I'm always scare I forget to pay too, mostly for cc points, so I'd just over pay cc like a savings account. The five "thousand" was a mistake, was only suppose to put $500 five hundy. :banghead:

http://i142.photobucket.com/albums/r95/Tomcompany/Past%20repairs/Random/cc_zpsuglq5fea.jpg~original

[jwslam]

Originally posted by lasimmon
I actually set a monthly reminder in my work calander to remind me that I need to pay it.
I tried that and their schedule for cycles is F*ed. I can never keep up with how it changes. It ranges from 26 to 35 days. Always messes me up. That's why I'm keen on paper statements.

[lasimmon]

Originally posted by jwslam

I tried that and their schedule for cycles is F*ed. I can never keep up with how it changes. It ranges from 26 to 35 days. Always messes me up. That's why I'm keen on paper statements.

What?

I get my statement the same day every month (19th). With payment due the same day every month (8th). I set my reminder for the 3rd and I have 5 days to pay.

[Disoblige]

Ya it's pretty easy to just set reminders on your phone or something. Set it a few days prior to being due and you're golden. If you can line it up with your pay check deposits (if you don't have unlimited transfers), even better.

[06civic]

They also have an auto pay function if you are forgetful

[Mitsu3000gt]

Originally posted by jwslam

I tried that and their schedule for cycles is F*ed. I can never keep up with how it changes. It ranges from 26 to 35 days. Always messes me up. That's why I'm keen on paper statements.

I've never heard of or had a credit card in my life that didn't have very precise schedules. The # of days is set, so the only way it fluctuates is with the months having a varying number of days in them, just like anything else. Should be one month between accruals (eg. my accrual period ends and the next one begins on the 17th of every month), and then 40 days or so to pay, which might be where the confusion is. It's like clockwork.

[sabad66]

Originally posted by Mitsu3000gt


I know people who just pay the ~20% CC interest every month, but refuse to go get a ~5% LOC from the bank :rofl: It's astonishing really.
FYI it's not that easy to get a 5% LOC from the bank. Especially if they are the type of person that only pays the interest on their CC every month. Most unsecured PLOCs are around 8-10%. It's only the HELOCs that you can get 3-5%.

[lasimmon]

Originally posted by sabad66

FYI it's not that easy to get a 5% LOC from the bank. Especially if they are the type of person that only pays the interest on their CC every month. Most unsecured PLOCs are around 8-10%. It's only the HELOCs that you can get 3-5%.

I have a 6.19% unsecured PLOC that was just offered to me. I am the kind of person you describe, just pay your CC every month.

[Mitsu3000gt]

Originally posted by sabad66

FYI it's not that easy to get a 5% LOC from the bank. Especially if they are the type of person that only pays the interest on their CC every month. Most unsecured PLOCs are around 8-10%. It's only the HELOCs that you can get 3-5%.

They were offered one and turned it down, so they were at least eligible haha. The banks seem to hand them out like candy (at least they used to). I'm sure most people have seen one of those letters in the mail saying "hey you qualify for an unsecured LOC at 5.XX% or prime + X%" or had the bank teller give them the spiel. I had one when I was 18 haha. Maybe things are different now but nothing I've ever seen has suggested they are hard to get. The very few HELOC's I've seen have been at prime. My unsecured LOC is in the 5% range but I never use it.

My only point was that there are at least some people out there who willingly choose to pay 20% instead of ~5% :nut:

[jwslam]

Due Dates on my last 6 on TD Infinite

Mon Jan 4
Mon Feb 1
Thu Mar 3 <- No rhyme or reason!
Fri Apr 1
Mon May 2
Wed Jun 1

Due Dates on my last Chase Visa

Wed Jan 18
Wed Feb 17
Mon Mar 21 <- No rhyme or reason!
Mon Apr 18
Wed May 18

Can't find the extreme example card I had... I'll find it somewhere in my paper records though!

[Mario38]

jwslam,

The March due dates were later because February is a short month. They are trying to give you a consistent amount of time to pay.

[Disoblige]

:confused: :facepalm:
You realize February only has 29 days this year right?

Jan 4th was due to holidays, rest are pretty close. What's the issue?

[jwslam]

The issue is... same amount of days or the exact same day each month. Stop messing with my head!

[Disoblige]

You get ~3 weeks to pay it after the invoice is sent out usually, and they typically alert you by e-mail (you can set it up that way). Still not sure what the issue is with 1-2 days difference with the 3 week leeway.

[Mitsu3000gt]

It's the same amount of days every month, that doesn't change. The fact that months have 28,29,30,31 days in them is the only thing that moves your payment date around. The exact number will be in your documents, but it's usually 40 days from when your accruals stop for that given month.

[sabad66]

Originally posted by lasimmon


I have a 6.19% unsecured PLOC that was just offered to me. I am the kind of person you describe, just pay your CC every month.



Originally posted by Mitsu3000gt


They were offered one and turned it down, so they were at least eligible haha. The banks seem to hand them out like candy (at least they used to). I'm sure most people have seen one of those letters in the mail saying &quot;hey you qualify for an unsecured LOC at 5.XX% or prime + X%&quot; or had the bank teller give them the spiel. I had one when I was 18 haha. Maybe things are different now but nothing I've ever seen has suggested they are hard to get. The very few HELOC's I've seen have been at prime. My unsecured LOC is in the 5% range but I never use it.

My only point was that there are at least some people out there who willingly choose to pay 20% instead of ~5% :nut:
Dang, i need to call in and get a better rate. Mine's at 7.9% right now and i've been a long time BMO customer with good credit

:banghead:

i still stick with my original statement that it's hard to walk in and get a 5% unsecured these days. going to try for at least 6.2% that you got lasimmon

[suntan]

7.49% on my unsecured PLOC. I could get better. My wife's is 6.49% or something, same bank, same LOC type.

[Xtrema]

Originally posted by sabad66

i still stick with my original statement that it's hard to walk in and get a 5% unsecured these days. going to try for at least 6.2% that you got lasimmon

After reading all your rates, I thought bank prime increased.

Still at 4.7% unsecured but I don't think I'll ever use it because HELOC is 3.2%.

[Mitsu3000gt]

Originally posted by sabad66




Dang, i need to call in and get a better rate. Mine's at 7.9% right now and i've been a long time BMO customer with good credit

:banghead:

i still stick with my original statement that it's hard to walk in and get a 5% unsecured these days. going to try for at least 6.2% that you got lasimmon

It's very possible that it's hard to get 5% these days, but the point is that even if it's 6 or 7% it's far better than CC interest haha. I think mine is 5.7% but I got it a while ago.