# How credit card interest calculated based on monthly interest rate. Be patient with the content

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Deal Subedar
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General formula to calculate interest on credit card: (Number of days are counted from the date of transaction made x Entire outstanding amount x Interest rate per month x 12 month)/365.

Let’s first take a basic illustration of a credit card statement:
Transaction date: July 1, 2019
Transaction Amount: Rs 10,000
Statement Date: July 6, 2019
Minimum Amount Due (normally 5 percent of retail purchases + other fee charges): Rs 500 (5 percent of 10,000)
Total Amount Due: 10,000
Amount Due Date: July 26, 2019
Assumed a monthly interest rate of 3.5 percent on unpaid credit card bill

Scenario 1: Pay full bill amount before the due date
Bill amount fully paid on: July 21

Calculation:
Interest levied for 21 days (Between July 1 and July 21): 241.56 [21*10000*3.5% * 12/365 = 241.56]
Total interest charged = 0

Scenario 2: Partial payment before the due date
Payment date: July 21
Next statement date: August 6
Transaction done between July 6 to August 6: NIL

Calculation:
Interest levied for 21 days (Between July 1 and July 21): 241.56 [21*10000*3.5% * 12/365 = 241.56]
Interest levied for 15 days (Between July 22 and August 6, on balance of 5000 [10000 (Bill amount) – 5000 (payment made)]): 86.4 [15 * 5000*3.5%*12/365 = 86.4]
Total interest charged = 86.4 + 241.56 = 328

Scenario 3: Partial payment after the due date
Payment date: July 28
Next statement date: August 6
Transaction done between July 6 to August 6: NIL

Calculation:
Interest levied for 28 days (Between July 1 and July 28) = 322.2 [28*10000*3.5% * 12/365 = 322.2]
Interest levied for 9 days (Between July 28 and August 6 on balance of 5000 [10000 (bill amount) – 5000 (payment made)]) = 51.8 [9 * 5000*3.5%*12/365 = 51.8]
Total interest charged = 51.8+322.2 = 374

Scenario 4: Partial payment after the due date and subsequent transactions made
Payment date: July 28
Next statement date: 6 August
Transaction done between 6 July to 6 August: 1
New transaction amount: Rs 1000
New transaction date: July 15

Calculation:
Interest levied for 15 days (Between July 1 and July 15) = 172.6 [15*10000*3.5% * 12/365 = 172.6]
Interest levied for 13 days (Between July 16 and July 28 on balance of 11000 [10000 (outstanding (bill amount) from previous statement) + 1000 [new transaction]) = 164.5 [13 * 11000*3.5% * 12/365 =164.5]
Interest levied for 9 days (Between July 28 and August 6 on balance of 6000 [11000 (outstanding) – 5000 (payment made)]) = 62.13 [9 * 6000*3.5%*12/365 = 62.13]

6 Dimers
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Tell me in one line sentence..
If you make a partial payment before due date , when will the interest kicks in? Will that be on full due amount or balance amount? If your answer is on balance amount , then you are wrong.

If we pay partial payment before due date, do we have to pay interest on unbilled txns too when the next month’s bill is generated? If your answer is no , then you are wrong.

Deal Subedar
223
1650
20

Tell me in one line sentence..
If you make a partial payment before due date , when will the interest kicks in? Will that be on full due amount or balance amount? If your answer is on balance amount , then you are wrong.

If we pay partial payment before due date, do we have to pay interest on unbilled txns too when the next month’s bill is generated? If your answer is no , then you are wrong.

Content updated.

“If you make a partial payment before due date , when will the interest kicks in? Will that be on full due amount or balance amount? If your answer is on balance amount , then you are wrong.”

Me: There are 2 things here. Example, cycle starts from July 6, due date is on 26th June and you paid 5k instead of 10k. Then interest charge for 20 days(July 6 to July 26) on full amount(10k) and charge for days (July 27 to Aug 6) on remaining amount(5k).

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jaybro wrote:

Content updated.

“If you make a partial payment before due date , when will the interest kicks in? Will that be on full due amount or balance amount? If your answer is on balance amount , then you are wrong.”

Me: There are 2 things here. Example, cycle starts from July 6, due date is on 26th June and you paid 5k instead of 10k. Then interest charge for 20 days(July 6 to July 26) on full amount(10k) and charge for days (July 27 to Aug 6) on remaining amount(5k).

That’s correct. So, it is always safe to pay off the full amount, by taking the loan on CC or any other option.

Partial payment: The subsequent unbilled transactions would also attract the interest from the day of purchase to billing date. So it is a double blow if you opt for partial payment.

Deal Subedar
223
1650
20
Expand

That’s correct. So, it is always safe to pay off the full amount, by taking the loan on CC or any other option.

Partial payment: The subsequent unbilled transactions would also attract the interest from the day of purchase to billing date. So it is a double blow if you opt for partial payment.

Yes, it is not good option to until due date. Better to pay when you received the statement.

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VU & KG+ @jaybro

Deal Subedar
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dgreatgambler007 wrote:

VU & KG+ @jaybro

Hey thanks bro

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Better not to get into this thing
If by chance you have to make less payment to card, don’t be spending from that card any more. Each bank has different calculation mechanism, aur Haan Baap ka dada ka, sab ka badla lega bank

Critic
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all interest charges additionally attract 18% GST. so amt payable will be more.
Never make partial payment. always pay in full. if needed, get a personal loan to repay instead of carry forward in credit card.
initiate payment at least 4 days before due date. if your net banking permit setting up of post dated transaction, set up future dated payment as soon as you get the bill so that you do not forget when bill becomes due.

Deal Subedar
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panchabhut wrote:

all interest charges additionally attract 18% GST. so amt payable will be more.
Never make partial payment. always pay in full. if needed, get a personal loan to repay instead of carry forward in credit card.
initiate payment at least 4 days before due date. if your net banking permit setting up of post dated transaction, set up future dated payment as soon as you get the bill so that you do not forget when bill becomes due.

Exactly. Above mentioned is the interest to be paid to bank. For that interest, we need to pay GST also. So it is not good option to postpone the billing or pay partial payment.

Blogger
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2013
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You can pay cc bill via imps

Gets
Immediately updated .

Blogger
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2013
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Are there any offers on cc bill payment, i have 4 active cards.

Deal Subedar
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rogerthat wrote:

Are there any offers on cc bill payment, i have 4 active cards.

You can pay through cred bro. After that you will get points and can claim many deals and coupons. There is offer on phone pe first credit card payment.

Blogger
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2013
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jaybro wrote:

You can pay through cred bro. After that you will get points and can claim many deals and coupons. There is offer on phone pe first credit card payment.

Pm me referral if any