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I recently started using a credit card. I get the credit card statement by 22nd of every month, and the payment is due by the 1st of next month.

The full amount is automatically debited from my account on the 1st of every month.

Yet, I see there is always interest amount in my credit card statement. My bank says that my credit card is of a type set to "always pay the bills fractionally", and it doesn't matter even if I pay the bill in full.

Is there such a type of credit card? This is from one of the leading banks in Spain.

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    Well it sure seems so. Every card will come with pages of fine print describing the terms of your agreement. It will all be there. I don't know how common this is in Spain, but in the U.S., no interest would accrue. – JTP - Apologise to Monica Nov 4 '15 at 17:07
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    I have a vague memory of a card being available in the UK that had no interest free period, but in exchange, had a much lower interest rate than most cards, so I don't think the "no interest if you pay in full" thing is something that credit card companies have to offer. – rjmunro Nov 4 '15 at 17:30
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    It's possible. The US used to have a concept called two-cycle billing which would remove the grace period. It was made illegal in 2009. See: creditcards.com/glossary/term-twocycle-billing.php – Alex B Nov 5 '15 at 0:15
  • Which bank is your credit card with? – Ben Miller - Reinstate Monica Dec 5 '15 at 2:46
  • The bank offers a Gold card, where you always pay interest no matter what, and a Classic card, which offers an interest-fee period if you pay credit card bill in full. – M K Dec 9 '15 at 19:07
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A lot of credit card companies these days uses what they call "daily interest" where they charge the interest rate for the number of days till you pay off what you spent. This allows them to make more money than the "period billing".

The idea of credit, theoretically, is that there isn't really a day when you can borrow without paying interest - in theory

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Do you withdraw cash from your credit card? That is called a cash advance, and interest is usually started from the day you withdraw it.

  • No, didn't withdraw cash at all. – M K Dec 30 '15 at 20:57

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