Understanding credit card interest and billing cycle

creditnewbie OP

creditnewbie

2d ago

Can someone explain how the billing cycle and interest works? I'm confused about:

Statement date vs due date

When does interest start?

What is the grace period?

Minimum payment trap

I want to understand this properly before using my new card. Thanks!

4 Comments

cardmaster · 2d ago

Great questions! Let me explain:

Statement Date: The date your monthly statement is generated. All transactions from previous cycle appear here.Due Date: Usually 15-20 days after statement date. Pay FULL amount by this date to avoid interest.Grace Period: The time between statement and due date. NO interest charged if you pay full amount.Interest: If you pay less than full, interest is charged from the DATE OF TRANSACTION (not statement date)! This is typically 3.5% per month or 42% annually.Minimum Payment Trap: Paying just minimum (usually 5%) means you pay interest on the rest. It's a debt trap!

Golden rule: ALWAYS pay full statement amount before due date.

rewardhunter · 2d ago

To add - if you miss even one full payment, you lose the interest-free period for new transactions too!

dealseeker · 2d ago

The minimum payment trap is real. I learned this the hard way in college. Took months to clear the debt.

cardmaster · 2d ago

Pro tip: Set up auto-pay for full amount. Never miss a payment!