Credit Card Repayments

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adrianx

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Let's say I buy something for R100 with my credit card and lend a friend R100 (transfer). For the purchase, I have up to 57 days to repay before I incur interest, but for the transfer only 30 days.

If I pay R100 into my credit card, which one of the two transactions above gets paid off first?

Edit: Are transactions paid off in the order that they are made..... jeez, I'm confused now.
 
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Contact your bank to make sure would be my advice :)
 
I doubt the banks use two different methods of calculating the terms. My discovery CC has one 56 day limit on the credit balance, regardless what I've used the money for.
 
VG008 said:
I doubt the banks use two different methods of calculating the terms. My discovery CC has one 56 day limit on the credit balance, regardless what I've used the money for.
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I remember reading somewhere that the 50-something day limit does not apply to transfers, but I'm talking about ABSA. It wouldn't surprise me if other banks/institutions don't suck as much. :)

Edit: This is a quote from ABSA's website:
Up to 57 days interest free on qualifying purchases (excluding cash withdrawals, casino transactions, Internet Banking transfers, garage card fuel purchases and budget plan purchases). All outstanding balances must be paid by the due date
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adrianx said:
Let's say I buy something for R100 with my credit card and lend a friend R100 (transfer). For the purchase, I have up to 57 days to repay before I incur interest, but for the transfer only 30 days.

If I pay R100 into my credit card, which one of the two transactions above gets paid off first?

Edit: Are transactions paid off in the order that they are made..... jeez, I'm confused now.
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General rule of thumb is that interest is calculated on the amount you've spent on your credit limit (read: bank's money) how long it has taken you to pay it off (read: settle your credit card).

Basically, settle your card at the end of each month and no interest will be charged.

Otherwise, you pay the minimum amount and will be charged interest on the remaining balance at the end of the following month (or whenever your next credit card statement cycle occurs).
 
Lycanthrope said:
General rule of thumb is that interest is calculated on the amount you've spent on your credit limit (read: bank's money) how long it has taken you to pay it off (read: settle your credit card).

Basically, settle your card at the end of each month and no interest will be charged.

Otherwise, you pay the minimum amount and will be charged interest on the remaining balance at the end of the following month (or whenever your next credit card statement cycle occurs).
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Thanks, this is what I usually do, but this friend of mine is taking more than 30 days to pay me back.

I have already paid off my "qualifying purchases", but not the smaller amount which was the transfer.
 
General rule of thumb is to not have a credit card :D

I must have been able to pay off the debt of a small African country with the amount of interest I've paid to the banks.
 
I am almost sure all cash withdrawals and cash transfers start attracting interest immediately. The (up to) 57 days interest free only applies to purchases.

Otherwise you could withdraw cash up to your credit limit every month, invest it in a savings account for 29 days and earn interest there and then pay it back into your credit card before it starts costing you anything, and repeat the next month.
 
Roux28 said:
I am almost sure all cash withdrawals and cash transfers start attracting interest immediately. The (up to) 57 days interest free only applies to purchases.

Otherwise you could withdraw cash up to your credit limit every month, invest it in a savings account for 29 days and earn interest there and then pay it back into your credit card before it starts costing you anything, and repeat the next month.
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That makes a lot sense, but the interest I would earn on my credit limit in 29 days would be wiped out by bank charges. :)

I'm not sure how to explain this properly. Let's say I buy something from Game for R399, my friend owes me R400 that I transferred to him on the same day. I pay back exactly R400 as soon as I get home.... How does ABSA "know" whether the R400 is towards the transfer (R400) or the purchase (R399)?
 
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adrianx said:
That makes a lot sense, but the interest I would earn on my credit limit in 29 days would be wiped out by bank charges. :)

I'm not sure how to explain this properly. Let's say I buy something from Game for R399, my friend owes me R400 that I transferred to him on the same day. I pay back exactly R400 as soon as I get home.... How does ABSA "know" whether the R400 is towards the transfer (R400) or the purchase (R399)?
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They don't.

As far as I can tell, they see it as one balance (your credit card limit). If it's not paid in full by the end of the next statement cycle, they charge you the appropriate interest.

Interest on amounts such as withdrawals, petrol purchases, etc are billed regardless, I think

But I'm not 100% sure.

If I'm reading my statements (FNB) correctly, I am charged interest for petrol and withdrawals regardless of my credit card having a positive balance by the end of my billing cycle (yay R6.72 in interest). So I suspect you'll be charged regardless.

I guess just take a look at your next statement? :p
 
Lycanthrope is correct. Pay the full amount outstanding when payment is due. If you can't then you will pay interest fees.

Also never pay the minimum due amount, cause this is where a credit card becomes EVIL. Your interest fees will increase month by month and your available credit will decrease until you find your credit is always 0 and you end up paying fees until you die on an account you cant use.

Credit card can save you fees especially when you swipe your card at shops because there is no charge. Unlike normal savings and cheque accounts you pay every time you swipe your card for purchases. However most banks got packages on their cheques account meaning you might get unlimited amount of swiping on your debit card.
 
ShaunyCT said:
Lycanthrope is correct. Pay the full amount outstanding when payment is due. If you can't then you will pay interest fees.

Also never pay the minimum due amount, cause this is where a credit card becomes EVIL. Your interest fees will increase month by month and your available credit will decrease until you find your credit is always 0 and you end up paying fees until you die on an account you cant use.

Credit card can save you fees especially when you swipe your card at shops because there is no charge. Unlike normal savings and cheque accounts you pay every time you swipe your card for purchases. However most banks got packages on their cheques account meaning you might get unlimited amount of swiping on your debit card.
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Bolded part is not correct.

If you pay minimum amount due a portion of that will be used on the capital amount owed. Every month the capital amount outstanding will get lower and thus the interest charged will be smaller...
 
Interest on your credit card account is calculated daily on the daily outstanding balance. This does not mean it gets charged to your account though.

Assume for simplicity that your credit card cycle is 1st of a month to the last day of the month, with the due date for settlement the 26th of the following month:

Billing Period: 1 May 2012 - 31 May 2012
Statement Due Date: 26th June 2012

at the end of the first of May, the bank calculates daily interest for the amount outstanding at midnight, this gets added to an accrued interest amount. A similar calculation occurs at the end of each day and gets added to the accrued interest. (Note this is not compounded as the accrued interest is not added to the balance outstanding on a daily basis.) So at the end of the statement period you have accrued interest of say R100. Your outstanding balance is say R3000. You will be required to pay the outstanding balance of R3000 before the due date 26th June to avoid the accrued interest being charged to your account in the next statement.

Cash-like purchases such as ATM withdrawals, Fuel, Casino chip purchases, EFT's will have their accrued interest calculated separately, (and indeed your payments are allocated to cash-like purchases first as the OP has asked) and this accrued interest will always be added in the next statement even if you settle the full outstanding balance by the due date.

Hope this clarifies.
 
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