Credit card interest computation?

Question

Does anyone rember when natioal credit cards had to give you 30 days before charging interest on purchases? Kindly explained how this worked

If it wasn't a requirment,,,, than why did it take federal law to change to current system?

Answer 1

Long, long ago in a land far away credit card companies did not charge any interest until and unless you paid less than the full amount of the bill, and then they didn't start charging interest until the last payment day on that bill.

But one day they figured that their customers were so stupid that they could get away with highway robbery, and they began charging retroactive interest. So if you pay as little as one penny less than the amount due, they charge interest on every purchase on the current bill from the date of that purchase until (1) the date of payment or (2) the date of the next bill that is paid in full.

I think (1) is the more common system. But in effect you have to pay 100% of the balance due on that particular day -- so you have to overpay to be sure you have a zero balance. Very tricky.

One can still "game" the system, but only if you have multiple credit cards AND an overdraft facility on your checking account. You can then take advantage of free or low-interest balance transfer deals, then stick that card in a drawer and never charge anything on it until you've paid it off.

Answer 2

The 30 day grace period was never a requirement. It started out that way, but has slowly shrunk as the credit card companies became ever more greedy. Nor was it ever a requirement that they offer any free period at all, and in fact some do not and never did.

Answer 3

nope