Do Credit Cards Charge Interest If You Pay in Full Monthly?

Credit cards are a tricky business to juggle, particularly if you are like many Americans who have more than one piece of plastic in your wallet. Many people say they keep credit card interest charges at bay by choosing to pay in full each month.

While it is true that paying off the balance every month is a healthy financial choice, it is also true that issuing banks can and do find ways to charge unfair interest anyway.

According to My Bank Tracker, it is important to take the time to understand all the basic terms related to credit card billing to avoid being taken by surprise.

As indicated in a January 2019 article posted on The Balance, the first of these terms to grapple with is the billing cycle. The billing cycle is a period ranging from 25 to 31 days in length and is the period of time between the issuance of one month’s credit card statement and the next. The billing cycle has a closing date which is usually the day before the next statement is released.

As an example of this, a newly opened credit card with a zero balance can issue its first statement on Dec. 10. Because it is new, no charges will theoretically show on this statement. Any charging activity taking place between Dec. 10 and Jan. 9 will show on the next statement released on Jan. 10.

Your due date is the date payment is due. It is usually the same as the closing date. It typically represents the end of an interest-free grace period for purchases appearing on the last statement. If a person chooses not to pay in full for those purchases by that date, they will owe interest on them.

Now here is where it gets dicey. Many consumers may pay in full for those purchases along with purchases in the next cycle and bring their account down to zero. In so doing, they assume no interest will be charged. According to a February 2018 article on Investopedia, a concept known as residual interest may cause account holders to be charged more in interest than they expected.

Residual interest is interest money owed for the purchases made and not paid for during the interest-free grace period of the first billing cycle. Even when a consumer has paid off their credit card, these can be assessed and cause problems for an individual’s credit score. The residual interest may not be a large figure by any means, but it can escape the notice of a consumer that assumes they have a zero balance and fails to check statements.

To avoid this problem, credit card holders can pay off all purchases on the bill by the due date. Nevertheless, this is just one trick of several of the big issuing banks. If you or someone you know has had their credit score marred by unnoticed residual interest, you may qualify to participate in legal action with other consumers.

Join a Free Credit Card Interest Class Action Lawsuit Investigation

If you were charged credit card interest months after paying off the balance of your credit card, you may qualify to join this credit card interest class action lawsuit investigation.

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