Credit card grace period

[TheRedViper]

This might seem like a dumb question but there's different answers on the web regarding this question and I want to figure it out. So with my credit card comes a 21 days so called grace period where you don't have to pay interest on your purchase if you pay your payment in full within said period.

 

My first question goes like this: Is the grace period independant on each transaction or is it a said point within the month? Lets say you have 3 transactions, 1 on august 12th and 2 on august 15th. The first transaction must be paid in full before September 3rd and the two others before September 5th or interest will apply or is it that you need to pay the accumulated balance before X day of the month in full or interest apply.

 

My second question goes like this: If I purchased stuff with my credit card between August 12 and 18 and I pay them in full on my next paycheck on August 25, but I need to make an emergency purchase tomorrow on August 19 that I won't be able to clear with my next paycheck, I would still be fine to pay it with my September 8th paycheck because August 19 + 21 days = September 9th right?

[dalekphalm]

7 hours ago, TheRedViper said:

This might seem like a dumb question but there's different answers on the web regarding this question and I want to figure it out. So with my credit card comes a 21 days so called grace period where you don't have to pay interest on your purchase if you pay your payment in full within said period.

 

My first question goes like this: Is the grace period independant on each transaction or is it a said point within the month? Lets say you have 3 transactions, 1 on august 12th and 2 on august 15th. The first transaction must be paid in full before September 3rd and the two others before September 5th or interest will apply or is it that you need to pay the accumulated balance before X day of the month in full or interest apply.

 

My second question goes like this: If I purchased stuff with my credit card between August 12 and 18 and I pay them in full on my next paycheck on August 25, but I need to make an emergency purchase tomorrow on August 19 that I won't be able to clear with my next paycheck, I would still be fine to pay it with my September 8th paycheck because August 19 + 21 days = September 9th right?

Quite simply, you need to call your Credit Card provider and ask them the details directly.

 

HOWEVER, most Credit Cards tend to work as follows:

The 21-day grace period starts the day your Credit Card statement (The "bill") is dated for.

 

Transactions are broken down into statement periods of 1 month. Any transaction within that statement period (basically anything that appears on the bill), will start accumulating interest 21 days after the bill comes out. The bill itself should have a "Due Date". That due date is the end of your 21 day grace period.

 

So the "tl;dr" of it is this:

If you pay off your credit card in full, before the due date, you won't get charged interest.

 

Also: Something I found out recently with my own Credit Card: Cash Advances (When you withdraw cash from your Credit Card using an ATM/ABM) do not have a grace period, and interest starts to accumulate immediately. Obviously, you shouldn't withdraw cash from a Credit Card unless it's an emergency, but something to note, none the less.

[pyrojoe34]

The best thing you can do is never buy anything with a card that you are not 100% certain you can pay off right away. If for some reason you NEED a loan for something important (rent, food, etc) then don't use you credit card, they have the worst interest rate and fees. Go to you bank or credit union and get an emergency loan with low interest, then pay it off asap. If you're thinking of buying anything that not absolutely necessary then just suck it up and wait until you have enough money to pay it off before the next cycle. Don't use a credit card as a loan, it's just about the worst deal you will ever get, if you're unsure about dates and stuff just don't buy anything with it and call your card company with any questions regarding policy. You are throwing your money away if you ever pay a cent to a credit card company.

[Mug]

1. Phone up your bank, they will be more than happy to explain
2. Don't get a credit card - I only have debit cards for this reason, debt is bed. Then again, I still have a student overdraft for some reason - I don't use it but I still have it.
3. Why? Credit cards make no sense, either save up for a month or so to get the thing you want or get a proper loan at lower interest rates from your bank.

[LordGrizzillaKreme]

9 hours ago, Mug said:

1. Phone up your bank, they will be more than happy to explain
2. Don't get a credit card - I only have debit cards for this reason, debt is bed. Then again, I still have a student overdraft for some reason - I don't use it but I still have it.
3. Why? Credit cards make no sense, either save up for a month or so to get the thing you want or get a proper loan at lower interest rates from your bank.

Not having a credit card or not using a credit card is one of the stupidest things you can do. Your credit cards builds your credit. You need credit to take out loans, buy a house / vehicle, etc. If you go to any establishment their not going to give you shit if you cant prove that your good for it. You may not need it now but in the future when you need a mortgage, you'll be shit out of luck when they have no evidence that you are trustworthy. Thats why everyone says get a credit as young as you can, make transactions and pay them off as quick as possible.

[SpaceGhostC2C]

5 minutes ago, LordGrizzillaKreme said:

Not having a credit card or not using a credit card is one of the stupidest things you can do. Your credit cards builds your credit. You need credit to take out loans, buy a house / vehicle, etc. If you go to any establishment their not going to give you shit if you cant prove that your good for it. You may not need it now but in the future when you need a mortgage, you'll be shit out of luck when they have no evidence that you are trustworthy. Thats why everyone says get a credit as young as you can, make transactions and pay them off as quick as possible.

You don't need to revolve debt for that, though.

[Mug]

12 minutes ago, LordGrizzillaKreme said:

Not having a credit card or not using a credit card is one of the stupidest things you can do. Your credit cards builds your credit. You need credit to take out loans, buy a house / vehicle, etc. If you go to any establishment their not going to give you shit if you cant prove that your good for it. You may not need it now but in the future when you need a mortgage, you'll be shit out of luck when they have no evidence that you are trustworthy. Thats why everyone says get a credit as young as you can, make transactions and pay them off as quick as possible.

Again, I didn't say that all debt was bad (I said it was bed :P), I took out a small loan for my first car and paid that off in the first few months. Credit cards make no sense though, they're just a huge rip off. If you need to get something over £400, get a proper loan that's not at extortionate rates, if you need something under £400, save for a few months.

[LordGrizzillaKreme]

23 minutes ago, SpaceGhostC2C said:

You don't need to revolve debt for that, though.

Never said you did, simply stated that not owning a credit card because you can simply use a debit card is not a great idea in this day and age. Buy a candy or lunch and pay it off. Later in life you still need to have some sort of credit. For large purchases like a PC I always make sure to have enough, order with credit, and pay it off later that day.

[LordGrizzillaKreme]

22 minutes ago, Mug said:

Again, I didn't say that all debt was bad (I said it was bed :P), I took out a small loan for my first car and paid that off in the first few months. Credit cards make no sense though, they're just a huge rip off. If you need to get something over £400, get a proper loan that's not at extortionate rates, if you need something under £400, save for a few months.

I do realize that. I simply stated to get a proper loan a lot of the time you need to have some sort of credit. Never said you have to go in debt because a credit card, just that you have to use it. Only buy things you can pay off. Didn't even tell OP to make the purchase since hes not sure if he can pay it off in time. Telling people not to get a credit card because you can use your own money is not the best advice as it is one of the most important things in your later years.

[dalekphalm]

12 minutes ago, LordGrizzillaKreme said:

Never said you did, simply stated that not owning a credit card because you can simply use a debit card is not a great idea in this day and age. Buy a candy or lunch and pay it off. Later in life you still need to have some sort of credit. For large purchases like a PC I always make sure to have enough, order with credit, and pay it off later that day.

One important thing is that some credit cards won't recognize credit usage if you pay it off before your statement comes in. Basically, some of them want to see a balance on your statement, that gets paid off before the due date. So with these companies, paying off credit the same day you buy something is the same as not even using the card at all.

 

You still avoid any interest charges as long as you pay it off before the due date.

 

47 minutes ago, LordGrizzillaKreme said:

Not having a credit card or not using a credit card is one of the stupidest things you can do. Your credit cards builds your credit. You need credit to take out loans, buy a house / vehicle, etc. If you go to any establishment their not going to give you shit if you cant prove that your good for it. You may not need it now but in the future when you need a mortgage, you'll be shit out of luck when they have no evidence that you are trustworthy. Thats why everyone says get a credit as young as you can, make transactions and pay them off as quick as possible.

I agree strongly with this. Not having a credit card at all is incredibly stupid and short sighted. If you have financial discipline and can budget, owning a credit card is no problem.

 

All you need to do is throw on some automated monthly bills to the credit card, then stow the card in a drawer and never use it except for emergencies.

 

41 minutes ago, SpaceGhostC2C said:

You don't need to revolve debt for that, though.

You won't revolve any debt at all if you simply pay your credit card bill on time.

[LordGrizzillaKreme]

2 minutes ago, dalekphalm said:

One important thing is that some credit cards won't recognize credit usage if you pay it off before your statement comes in. Basically, some of them want to see a balance on your statement, that gets paid off before the due date. So with these companies, paying off credit the same day you buy something is the same as not even using the card at all.

 

You still avoid any interest charges as long as you pay it off before the due date.

I know. It's just that my credit limit is very low as I'm still a student so I pay off large purchases immediately as my debit has a limit on daily spending and I might need to use my credit card later that month still.

[SpaceGhostC2C]

7 minutes ago, dalekphalm said:

You won't revolve any debt at all if you simply pay your credit card bill on time.

Of course, that's the definition of revolving debt. I guess I'm missing your point? :-? 

 

17 minutes ago, LordGrizzillaKreme said:

I do realize that. I simply stated to get a proper loan a lot of the time you need to have some sort of credit. Never said you have to go in debt because a credit card, just that you have to use it. Only buy things you can pay off. Didn't even tell OP to make the purchase since hes not sure if he can pay it off in time. Telling people not to get a credit card because you can use your own money is not the best advice as it is one of the most important things in your later years.

 

Exactly, using credit card debt as a financing source is a terrible idea, but having a credit card per se is not a problem, and if you live in the US it may even be helpful to build up credit scores.

[dalekphalm]

8 minutes ago, SpaceGhostC2C said:

Of course, that's the definition of revolving debt. I guess I'm missing your point? :-? 

 

 

Exactly, using credit card debt as a financing source is a terrible idea, but having a credit card per se is not a problem, and if you live in the US it may even be helpful to build up credit scores.

What I mean is that if you have the same, let's say, $400 bills that automatically go onto your credit card every month, and then you pay your bill every month, yes "technically" that's revolving debt. But in practice? No.

 

There's literally no practical difference between you paying it w/ credit card and then paying the one credit card bill, vs directly paying each of those bills. You're not "fronting" or "borrowing" money to pay the bills, since ultimately, within the same period, you're spending the same money you would anyway.

 

Now people who use credit cards incorrectly, is a whole different conversation. But having a Credit Card is almost mandatory in North America, if you want to be able to qualify for credit later in life for Mortgages, and perhaps even car loans (esp ones that are low interest).

 

If you have no credit history, then banks are much less likely to want to lend to you, as they have no idea about your habits, and whether you have the discipline to pay off debt.

[SpaceGhostC2C]

5 minutes ago, dalekphalm said:

What I mean is that if you have the same, let's say, $400 bills that automatically go onto your credit card every month, and then you pay your bill every month, yes "technically" that's revolving debt. But in practice? No.

 

There's literally no practical difference between you paying it w/ credit card and then paying the one credit card bill, vs directly paying each of those bills. You're not "fronting" or "borrowing" money to pay the bills, since ultimately, within the same period, you're spending the same money you would anyway.

 

Now people who use credit cards incorrectly, is a whole different conversation. But having a Credit Card is almost mandatory in North America, if you want to be able to qualify for credit later in life for Mortgages, and perhaps even car loans (esp ones that are low interest).

 

If you have no credit history, then banks are much less likely to want to lend to you, as they have no idea about your habits, and whether you have the discipline to pay off debt.

Revolving credit card debt is the debt you don't pay before interests start accruing. Revolving debt bears interest by definition.

You pay before that, you don't revolve, both in theory and practice.

[dalekphalm]

35 minutes ago, SpaceGhostC2C said:

Revolving credit card debt is the debt you don't pay before interests start accruing. Revolving debt bears interest by definition.

You pay before that, you don't revolve, both in theory and practice.

I think we both misunderstood each other then.

 

My original point above was that you can (and should) have a credit card, without ever paying a cent of interest.

[TheRedViper]

I checked with the bank itself and the bills end on the 18th each month and is due 21 days later (September 8th for this month) so therefore you can make purchases on the 19th and be safe because it will be due on the next bill that will end on September 18th. 

 

I only own a credit card to build up my credit. Iv'e always payed everything straight away with debit or cash, but if you don't build up your credit you can get refused stuff even if your financial situation is fine. Funny thing is that my uncle who owns a big land with dozens poulty worth a few millions and drives a 100k Jaguar was denied a loan because he never owned a credit card.

[Canada EH]

It does not matter one bit if you have $1.00 on the balance each month and you pay it off in full, or you have $10,000 on the balance and pay it off in full, or you pay the minimum payment. You still receive a 1 on your report which is the best you can get. If you default a certain amount of time you get a different number. A 9 is the worst.

 

Credit Scores - Companies have 1000's of algorythms to calculate your risk. These credit score companies that give you your number are a complete and utter waste of time and money.

 

Places like Check cashing and rent to own, even cell phone companies maybe even car lot auto loans wont report on time payments with a 1, but you miss payment you get a black mark.

 

You can get a free credit report from TransUnion and Equifax by going to their website and mailing in a form, you will receive it a month later. Its a little hard to find on their website as they want you to pay for their services, you get your report instantly.

 

The easiest companies to get a credit card from are department stores like Sears, Hudsons Bay Company, BestBuy and for a Mastercard then its Capitol One.

 

Black marks only stay on your credit report for a certain amount of time.

 

You can search all this information online. Different credit reporting agencies have varying lengths of time the information stays on.

 

Yes its always best to own a credit card for a rainy day. You can not do certain things without a credit card. Like get a hotel room or rent a car.

 

Having 1 credit card is good, having 2 credit cards is fine, after that it becomes a detrement to your score.

Every time you apply for a credit card, the credit card company will do a hard pull which stays on your record. If you do too many, in a short amount of time it appears you have a higher risk and is a detrement. So dont apply to 10 credit cards, but buying a house, then yeah a handful of hardpulls is normal.