Residual Retail Finance Charges

[HawaiianShirts]

One month, I made a $100 payment to it. She thought that meant I now had $100 available on it, and no explanation of finance charges could stop her from thinking that I was the stupid one.

Overheard my wife's roommate complaining to another roommate about her credit card once. It seemed she no longer liked her bank because they were charging her interest. Not "too much interest," just interest in general. She said, "They're just being greedy. It's my money!" Other roommate tried to explain that a credit card is a loan, but the immediate response, which made me , was, "No! It's my money! I'm just spending money that I don't have yet!"

I grumbled and paid it off, interest and all, when I got the next bill. I was surprised enough when the next bill after that still had interest on it that I called the bank. They explained it to me. I wasn't happy with it but what are you gonna do?

I did something similar. I think I said to the bank call center agent, "Oh, right! I get it. Lousy interest." And that was the end of that. Common knowledge? No, though it probably should be. Enough of a problem to pitch a fit over? Definitely not.

[smileyeagle1021]

A few things come to mind... first, the people who get so upset that they want to close their accounts are idiots. Unless the account has some sort of inactivity fee or minimum fees that have to be paid, keep it open and just don't use it if you aren't happy with the bank. Nearly 15% of your credit score is determined by how long, on average, your accounts have been open, and closing one means that you are going to be shortening your average account history. Second, as others have mentioned, why can't people read? It's spelled out in the contract you just signed, if you didn't read it, that is your problem, not the company you signed the contract with.

[TimmyHate]

"No! It's my money! I'm just spending money that I don't have yet!"

I...that someone can think that is inconceivable* to me. Is this stupidity or ignorance?


*Yes I keep using that word. Yes I know what it means. Yes I'm deliberably exagerating

[iner22]

Since my mom is a banker, I was taught financial security from an early age. But I still don't know exactly how credit cards work. My bank is pretty good about it, though. They'll send the credit statement a week or more before the due date. As long as I pay off the entire balance by the due date, I won't be charged any interest.

To make matters even easier, my favourite branch is perfectly willing to help me pay off the balance on both my cards when I come in. And they'll also be prompt in telling me if anything's wrong with my accounts. So I really just use my credit cards as bank cards, and when I eventually need to buy a car or house, I'll have a phenomenal credit score to get a loan with.

[bankworking]

I get a lot of customers who object if I accidentally call their credit card their loan. Because "it's not a loan, it's a credit card!" I fail to see the difference, but it is true that I am officially supposed to call it a credit card instead.

But not realizing credit card balance=loan is why people get into so much trouble with high credit card debt.

[mhkohne]

I get a lot of customers who object if I accidentally call their credit card their loan. Because "it's not a loan, it's a credit card!" I fail to see the difference, but it is true that I am officially supposed to call it a credit card instead.

But not realizing credit card balance=loan is why people get into so much trouble with high credit card debt.

I'd be checking to make sure you had the right account if you did that, but to object that it's fundamentally different is stupid. It's just a highly-available loan that I can access at the point of sale.

[Headset Hellion]

You don't even need to be at the POS. You can access that credit line with balance transfers, cash advances, access checks, and direct deposits.

[dianek93]

My first credit card, I could carry a balance, pay it all off, and not get charged interest. My second credit card, if I carry a balance then pay it all off, the next month I get charged a little interest. I didn't realize that some cards would do that. Know what I did when I first got that statement that I thought would have a zero amount to pay? Paid it. With nothing more than an "Oh...poo..." to the piece of paper.

[wolfie]

My understanding is that the residual charge is the interest incurred between the statement date and the date of payment. Until the balance actually reaches zero, you don't get back on the "pay your bill in full each month and you don't get charged interest" program - and the residual charge means that if you pay the balance listed on your statement, you don't get to zero.

To avoid this, either find out the "payoff" amount when you pay your bill, and pay that, or simply overpay the amount that's on the bill. If you use your card on a regular basis, you'll get back the "card company now owes ME" amount by your next statement date - and because the overpayment took you across the zero mark, you're now back on the "pay in full each month means no interest" program.