Why do my credit card finance charges make no sense?
Yeah, I think I did. That comment wasn’t intended to imply that you, personally, live off your credit cards or constitute financial advice for you, personally. It was intended to convey my absolute astonishment that anybody would be surprised to find a credit card company seizing an opportunity to gouge customers who do anything other than pay in full, on time. See, credit card companies are in business to make money. The interest-free thing for on-time payment is not something they do out of the goodness of their hearts. They do it because their competition does it. And the only way they are going to make money is if their customers fail to take advantage of the interest-free credit obtained by paying the bills in full, on time. So the company wants to arrange things to make such failures as likely as possible. That’s why they offer insanely high credit limits, and that’s why their interest rate calculation methods are hard to understand. Most people understand that they will be charg
Logic is a system for deriving conclusions from premises. You do not say what the premises are that lead you to believe that your card’s terms are “illogical.” I assure you that these premises are mistaken. Here is a premise that will conclude with terms such as the ones you discuss: credit card issuers will charge whatever the market will bear. Within that framework, such a system of finance charges is eminently logical. No, not everyone does two-cycle billing. Find a card issuer that doesn’t. It is a big ripoff—you are right about that.
It’s just you. This: or however the card company calculates the monthly interest rate, this is of no consequence …is wrong. They will calculate the interest due daily, and charge it at the end of the month/period. Even when you pay off the whole balance, you’re still obliged to pay the accrued amount which won’t’ve been on your statement. It’ll’ve been sitting in a hidden ‘accruals’ account somewhere, on their side.
Ah, yes, you have discovered the world’s most secret secret: credit card companies are out to hornswaggle, mislead, and otherwise confuse you out of as much money as they can get. And they’re good at it. As flabdablet said, stop living off credit cards! And, yes, carrying even a small balance over to the next month is living off your card… In this particular economic environment, I’d rank people who are not working as hard as possible to pay off their entire credit card debt “financially suicidal.” We’re in a recession; every single indicator & most commentators are gloomy if not dismal; it’s time to stop spending money you don’t have! (The soapbox is now free, if anyone would like to use it.
