CC interest

[nidena]

I asked this two days ago on the WIRR but that board isn't nearly as busy as this one.



A question about CC interest because I'd like to go back to using just one card again. My Visa is 8.9% w/a balance of $4500. My AmEx is 10.9% w/a balance of $1000. I've been paying the AmEx off every month for the past two months that I've been using it. The Visa had an $88 interest charge on $11,000 balance in Jan; $66 on $9,000 in Feb; $60 on $8,000 in Mar; and, likely, $40-$50 this month.



I try to understand how CC interest is calculated but, despite many attempts, it's not my strong suit. At what monthly balance would the interest $ amount be the same?



I started using the second card at the suggestion of another WIRR so that I wasn't adding to the Visa balance and I could see exactly how much I would pay off each month on the AmEx.  Which has worked out well and why I've been able to pay the Visa off that much quicker: less interest.

[minnesotapaintlady]

Apr 14, 2021 10:01:26 GMT -5 nidena said:

At what monthly balance would the interest $ amount be the same?

I'm not sure I understand what you're asking?  The same as what?  The amount of principal the minimum payment is paying?

Credit card interest is very complicated if you don't pay off every month (and if you do, you obviously pay no interest at all).  You get a grace period the first month, but after that if you don't pay in full every charge starts accruing interest immediately with no grace period at all.  So, it's hard to calculate exact interest because your charges from the beginning of statement period have accrued 30 days of interest while the ones at the end just started.

eta:  If you're NOT making any new charges on the 10.9% card, the monthly interest would be the balance times 0.009083  The minimum payments are around 2% of the account balance, but I'm not positive on the exact number.  I think cards set them differently.

So, if your balance is $4500 the interest would be $40.87 and min payment $90.

[nidena]

The same as each other if I didn't pay the 2nd one off, for that question.

At what point would 8.9 Visa interest = 10.9 AmEx interest.  Just me playing with numbers because, like I said, I want to go back to just one card. 

[minnesotapaintlady]

Never.  The one will always be 8.9 and the other 10.9   Stop carrying a balance and pay 0%. 

[nidena]

Apr 14, 2021 10:35:27 GMT -5 minnesotapaintlady said:

Never.  The one will always be 8.9 and the other 10.9   Stop carrying a balance and pay 0%. 

Well that isn't happening tomorrow, smart ass.

And you're telling me that the interest payment on an 8.9% balance will NEVER equal the interest payment on a 10.9% balance.  I know interest calculation isn't my strong point but even I know they would come close to each other at some point.

[ken a.k.a OMK]

Apr 14, 2021 11:19:28 GMT -5 nidena said:

Apr 14, 2021 10:35:27 GMT -5 minnesotapaintlady said:

Never.  The one will always be 8.9 and the other 10.9   Stop carrying a balance and pay 0%. 

Well that isn't happening tomorrow, smart ass.

And you're telling me that the interest payment on an 8.9% balance will NEVER equal the interest payment on a 10.9% balance.  I know interest calculation isn't my strong point but even I know they would come close to each other at some point.

minnesotapaintlady was right. You originally said "My Visa is 8.9% w/a balance of $4500. My AmEx is 10.9% w/a balance of $1000". Then changed the CC rate to a balance. 

[minnesotapaintlady]

Apr 14, 2021 10:35:27 GMT -5 minnesotapaintlady said:

Never.  The one will always be 8.9 and the other 10.9   Stop carrying a balance and pay 0%. 

Um.  Ok.  I wasn't being a smart ass.  You said the American Express you've been paying off every month right?  Just keep using that card and paying it off every month.

Now I see you're saying the interest payment, but that doesn't make sense if you're paying the one off every month.  That one should be zero. 

[ken a.k.a OMK]

I now understand your question too. The point where the payments are equal, and it would only be for one cycle, is a little complicated. But like minnesotapaintlady said most experts say to pay off the highest % cc first.

[mollyc]

I'm not sure I understand your question.   If you mean at what balance is the interest charged on the Visa (8.9%) the same as the interest charged on the Amex (10.9%) then I think I've figured that out, assuming your cards both charge you on the daily balance.

The one day interest on $1,250 @ 8.9% is approx $0.30

($1,250 * 8.9% * 1 day/365 days)

The one day interest on $1,000 @ 10.9% is approx $0.30

($1,000 * 10.9% * 1 day/365 days)

Other then that, it's a big spreadsheet if you want to work out the exact numbers because you have to calculate the balance at the end of everyday and take off the things that are in grace payment.

If I'm totally off the mark, my apologizes.

[nidena]

Apr 14, 2021 11:58:54 GMT -5 mollyc said:

I'm not sure I understand your question.   If you mean at what balance is the interest charged on the Visa (8.9%) the same as the interest charged on the Amex (10.9%) then I think I've figured that out, assuming your cards both charge you on the daily balance.

The one day interest on $1,250 @ 8.9% is approx $0.30

($1,250 * 8.9% * 1 day/365 days)

The one day interest on $1,000 @ 10.9% is approx $0.30

($1,000 * 10.9% * 1 day/365 days)

Other then that, it's a big spreadsheet if you want to work out the exact numbers because you have to calculate the balance at the end of everyday and take off the things that are in grace payment.

If I'm totally off the mark, my apologizes.

That was exactly what I was looking for.  Thank you.

[nidena]

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

[minnesotapaintlady]

Apr 14, 2021 13:00:30 GMT -5 nidena said:

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

But why?  Why not keep using the AmEx and paying it off until the Visa is 0 if you really prefer using that card?  Why pay interest from day one on new charges if you don't have to?

[jerseygirl]

Apr 14, 2021 13:00:30 GMT -5 nidena said:

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

When you say paying off the AmEx do you mean paying entire charge so $0 left? Hoping that’s what you’re doing

[nidena]

Apr 14, 2021 13:12:10 GMT -5 minnesotapaintlady said:

Apr 14, 2021 13:00:30 GMT -5 nidena said:

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

But why?  Why not keep using the AmEx and paying it off until the Visa is 0 if you really prefer using that card?  Why pay interest from day one on new charges if you don't have to?

I prefer the Visa.  It's accepted in more places.

[nidena]

Apr 14, 2021 13:14:28 GMT -5 jerseygirl said:

Apr 14, 2021 13:00:30 GMT -5 nidena said:

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

When you say paying off the AmEx do you mean paying entire charge so $0 left? Hoping that’s what you’re doing

Is there another definition for "paying off"?

[minnesotapaintlady]

Apr 14, 2021 13:18:05 GMT -5 nidena said:

Apr 14, 2021 13:14:28 GMT -5 jerseygirl said:

When you say paying off the AmEx do you mean paying entire charge so $0 left? Hoping that’s what you’re doing

Is there another definition for "paying off"?

I think people are confused because you're asking when the amount of interest your paying on one equals the amount you're paying on the other.  If you're paying the one off to 0 every month you're paying NO interest on that card. 

[susana1954]

nidena, be careful when you do believe you have paid off the Visa and don't start using it.  As others have tried to tell you, you accumulate interest every day on the Visa.  So if you think you've paid it off because you paid off what your statement said, you didn't.  You have to calculate the daily interest and pay that as well.  

[minnesotapaintlady]

Apr 14, 2021 13:25:28 GMT -5 susana1954 said:

nidena , be careful when you do believe you have paid off the Visa and don't start using it.  As others have tried to tell you, you accumulate interest every day on the Visa.  So if you think you've paid it off because you paid off what your statement said, you didn't.  You have to calculate the daily interest and pay that as well.  

Yep.  And if you don't, then all the new charges will start to accrue interest right away and the same thing happens the next month if you just pay what the statement says.

[nidena]

Folx, this was all just curiosity typed out.

I won't stop using my CC.  I was just curious about the comparison.

[minnesotapaintlady]

Apr 14, 2021 11:58:54 GMT -5 mollyc said:

The one day interest on $1,000 @ 10.9% is approx $0.30

($1,000 * 10.9% * 1 day/365 days)

Except this card she pays the balance off in full every month so it shouldn't be accruing any interest.

[Tiny]

Apr 14, 2021 13:00:30 GMT -5 nidena said:

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

If I were you - I would continue NOT using the Visa. I'd keep paying the Visa - until you made a payment that put the balance at 0$ and then WAIT A BILLING CYCLE before switching back to the Visa as your everyday card.

Basically, wait until you receive a bill from the Visa with a 0.00 amount due. Then start using the card again as your everyday card. You will have regained your "grace period" on NEW charges.

I suspect if you don't go thru a full billing cycle with a 0.00 amount due and no new charges - you will ALWAYS be charged some monthly interest and will never NOT pay interest on any of your charges new or old.

Why not just leave the Visa (in a drawer, the fridge, with your other financial papers) until the day AFTER it's July or August 2021 Close Date (added:  assuming you get it to a zero balance in late May/early June.   It's all about the Close date/bill date/whatever. )


If you think paying any interest even less than $1.00 on debt is acceptable every month - can you set up a $1.00 a month transfer to my personal account? Since you aren't using that dollar... I will gladly take the $1.00 per month you don't want or need.

[CCL]

Apr 14, 2021 11:58:54 GMT -5 mollyc said:

I'm not sure I understand your question.   If you mean at what balance is the interest charged on the Visa (8.9%) the same as the interest charged on the Amex (10.9%) then I think I've figured that out, assuming your cards both charge you on the daily balance.

The one day interest on $1,250 @ 8.9% is approx $0.30

($1,250 * 8.9% * 1 day/365 days)

The one day interest on $1,000 @ 10.9% is approx $0.30

($1,000 * 10.9% * 1 day/365 days)

Other then that, it's a big spreadsheet if you want to work out the exact numbers because you have to calculate the balance at the end of everyday and take off the things that are in grace payment.

If I'm totally off the mark, my apologizes.

Where is the $1250 coming from? I'm still confused.

[justme]

Apr 14, 2021 13:54:06 GMT -5 Tiny said:

Apr 14, 2021 13:00:30 GMT -5 nidena said:

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

If I were you - I would continue NOT using the Visa. I'd keep paying the Visa - until you made a payment that put the balance at 0$ and then WAIT A BILLING CYCLE before switching back to the Visa as your everyday card.

Basically, wait until you receive a bill from the Visa with a 0.00 amount due. Then start using the card again as your everyday card. You will have regained your "grace period" on NEW charges.

I suspect if you don't go thru a full billing cycle with a 0.00 amount due and no new charges - you will ALWAYS be charged some monthly interest and will never NOT pay interest on any of your charges new or old.

Why not just leave the Visa (in a drawer, the fridge, with your other financial papers) until the day AFTER it's July or August 2021 Close Date.


If you think paying any interest even less than $1.00 on debt is acceptable every month - can you set up a $1.00 a month transfer to my personal account? Since you aren't using that dollar... I will gladly take the $1.00 per month you don't want or need.

Exactly. I've fucked up a few times and got dates mixed up and paid my credit card on the wrong day so I got charged with interest. I then pay off that card with my fuck up, wait until I get the next bill, then start using it again. 

[tallguy]

Apr 14, 2021 13:00:30 GMT -5 nidena said:

Until a couple months ago, I used the Visa for everything.  I would make $2000-$3000 payments but then my day-to-day expenses would eat up $1000-$1200 of that so someone on the WIRR suggested using a second card for the day-to-day stuff.  So, since then, I've been using and paying off the AmEx and paying $1800-$2000 to the Visa.  I'm still a good 6-8 weeks from paying off the Visa and was trying to gauge when I could switch back to using just the Visa because the interest would be negligible enough that I didn't care.

After you pay off the balance and then go through a billing cycle putting NO new charges on it.  Paying off just the leftover interest that month will set your balance at zero and reinstitute your grace period.  Paying interest on a credit card is in my opinion the absolute worst thing you can do with money.  I would rather burn cash in front of people than pay interest on a card.  Ends up being the same thing, but at least burning it would give me the enjoyment of seeing the look on their faces as they watched me do it.  

Because I always have a grace period, I can go out and spend $10,000 on a great trip or all new appliances the day after my statement closes and not pay interest at all as long as I pay it off by the new statement's due date.  If I had even $1 left due from previous month's interest, that spending would probably cost me another $200 or more because I would be paying interest from Day 1 rather than having no interest for almost two months.  There is NO acceptable amount of credit card interest to my mind, and anyone thinking in those terms has already lost.  Changing that mindset should be the number one goal.

[mollyc]

Apr 14, 2021 15:06:26 GMT -5 CCL said:

[quote timestamp="1618419534" author="mollyc" source="/post/3249283/thread"

Where is the $1250 coming from? I'm still confused.[/quote]


I read the question as I have 2 cards - one with a 8.9% interest rate and one with a 10.9% interest rate. If I carry a balance on both, at what balance on each is the interest cost the same?

So if you carry a $1,000 balance on the 10.9% card, that is aproximately the same cost as carrying $1,250 on the lesser balance card

[CCL]

Oh. Ok. Thanks. I was looking at "My Visa is 8.9% w/a balance of $4500" and thought that was what you were referring to.

[nidena]

Apr 14, 2021 13:49:55 GMT -5 minnesotapaintlady said:

Apr 14, 2021 11:58:54 GMT -5 mollyc said:

The one day interest on $1,000 @ 10.9% is approx $0.30

($1,000 * 10.9% * 1 day/365 days)

Except this card she pays the balance off in full every month so it shouldn't be accruing any interest.

Why are you extra analyzing it when I already said that was the answer I was looking for?

[nidena]

mollyc, thank you for understanding my question and, again, for providing an answer in line with what I was looking for.

[nidena]

Both my cards stipulate that no interest is charged if the "New Balance" is what is paid by the due date.  I've already satisfied that requirement on the AmEx for this billing cycle.  I just did the math for the Visa and I'd need to pay another $3760 to satisfy the full "New Balance" payoff for this cycle: it was $7708.  Not enough cash reserves to do that by Apr 17th. lol

[TheOtherMe]

If you pay off the balance of a card that has interest included, as others have said, there has to be a billing cycle with no charges for interest to stop accruing.