|
|
Interest or Interest Charge or Interest Costs or Interest Charged And When or Interest Rate means: 4 "The highest Purchase interest rate is 25.9% from "Lombard Visa Card Classic". The highest Cash Advance interest rate is 29.49% from G.E. Money's "Go MasterCard"
Interest Free Period notes that the number of interest free days from the date of a Purchase to when interest commences charging on that Purchase if the Total Amount Owing is repaid, is up to 55 days. There is no Interest Free Period on a Cash Advance.
Forfeit Interest Free Period And Pay Interest On Each Purchase From Each Purchase Date explains that for most of the 50+ years existence of Credit Cards, the Cardholder paid Interest on any part of the Total Amount Owing that was not repaid by the Payment Due Date. If the Total Amount Owing was $500 and the Cardholder repaid $400 by the Payment Due Date, the Cardholder paid interest on $100 until the remaining $100 was repaid. And then the Interest Free Period was re-instated.
However, for many Credit Card Products in 2017 Interest on the Total Amount Owing is charged if a Cardholder does not pay their Total Amount Owing in full at the end of the one-month statement period. As Cardholders generally have about 14 to 25 days from receipt of their monthly statement to pay their previous month's Total Amount Owing, this means there is usually an Interest Free Period of between 44 and 55 days.
A Cardholder can forfeit the Interest Free Period for up to three months if repayment of its monthly Total Amount Owing is a day late or a dollar short, whereupon the applicable Interest Rate is charging (at an interest rate up to 25% pa) from the date of each Purchase.
Below is an extract from RBA Submission to the Senate Inquiry into Matters Relating to Credit Card Interest Rates - August 2015 - Submission 20 - Senate Economics References Committee - Introduction:
Each month, cardholders receive statements of their use of credit for transactions over the previous month. For a cardholder who has paid off their previous balance in full, credit cards typically offer an interest-free period of up to 55 days on new transactions, given that the cardholder typically has about 25 days following the end of the statement period to repay the statement balance. If the balance is not paid off in full, interest becomes due from the date of each transaction (and the cardholder will not benefit from an interest-free period the following month). In the June quarter of 2015, new credit card transactions averaged around $24 billion per month. At the end of June, the total level of credit card debt was $51.5 billion (Graph 11). Of this amount, $33.1 billion, or around 65 per cent was bearing interest. A simple calculation would suggest that around 75-80 per cent of transactions on credit cards do not accrue interest. That is, interest-paying ‘revolvers’ account for about 30-40 per cent of accounts, about 20-25 per cent of transactions, but close to two-thirds of the outstanding stock of debt. 9
Several Credit Card Issuers cancel the Interest Free Period for up to three months, if the Credit Cardholder does not pay 100% of the Total Amount Owing by the Payment Due Date, meaning the Interest Free Period is not available for three months, the Credit Cardholder is charged interest at up to 25% from the date of each Purchase, notwithstanding that the Official Cash Rate is 1½%. Why the banks sting you on credit card rates - Credit card holders gouged more than $2 billion since 2011, research shows August 4, 15 Banks rip off $3.49 billion from credit card users with high interest rates - Herald Sun - March 7, 2017
|
|
|
|