Credit Cards

Credit Card Q&A: I Paid Off My Balance, Still Got Charged Interest

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Credit card question: I paid off my credit card balance before the due date but I still got charged for interest expense. How can the issuer charge this if I pay within the grace period?

Answer: This situation has baffled a lot of consumers because the majority of cards do have grace periods. But there’s a reason for the interest charge and, believe it or not, it’s even easy to explain. The grace period—usually ranging from 21 to 25 days—means that if you pay off your total balance before the due date, there are no interest charges. But here’s the rub: If you are revolving a balance, you’ve already gone past the grace period. So you continue to pay interest on the balance.

Unless the timing is perfect, if you make a payment to eliminate a revolving balance, you’ll still receive an interest charge. It might not be clear what the remaining finance charges are even if you check your account balance online. You can always call your issuer and ask what the additional interest will be. Or, you can check your account balance within a day or two of making your final payment. Whatever you do, pay off the additional charges quickly. Don’t wait until the due date or you’ll be paying interest on the interest.

[Related article: Credit Card Q&A: What does a credit card "grace period" mean?]

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