How is Credit Card Interest Calculated?

My recent experience with accidentally paying my credit card bill late sent me back to my credit card agreement to figure out how long I’d be paying interest. The agreement does not seem to be consistent with how my account has been handled.

Here is what my credit card agreement says about the test for not having to pay interest:

We don’t charge interest on purchases appearing on your account statement for the first time if:
- you pay your new balance in full by the payment due date, and
- you also pay the new balance shown on your previous account statement in full by the due date shown on that account statement.

So, you have to pay your bill in full on time two months in a row to get back to interest-free purchases. That should have meant that my most recent bill wouldn’t have any interest on it, but I was charged interest.

My best guess is that the way a purchase is handled is related to the status of your account at the time the purchase was made rather than the time it appears on the statement. However, this is just a guess.

After having read through the whole agreement, it became obvious to me that the rules for charging interest are simply not clear. If there are any readers who can point me to a more precise description of how credit card companies charge interest, I’d appreciate it.

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