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I have a credit card that currently has balance on it past grace period. I am working on paying it out, but I also need it to pay for online purchases, etc.

I know that once you are past grace period, interest is charged right away. How does it work though.

Let's assume it's a 12% yearly credit card(I know, wonderland, but for sake of simplicity). Say it has $1000 balance on it. I put another $100, then 15 days later pay back the $100 back to $1000.

In this case, do I get charged for 15 days of using the $100 at rate 12/365? Or would i be charged for month worth of interest upfront?

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    Why add to the balance and compound (pun intended) your interest problem? Why not just get a debit card for online purchases? Or just wait and buy more stuff after you've paid back what you've borrowed? – D Stanley May 14 '18 at 20:58
  • I am paying out the balance in the next 1-2 months, but at the moment, my debit account is limited to 15 transaction with $1 for each transaction regardless of the amount above the limit. Hence I am trying to see which way is cheaper to live through that time. Plus, online purchases are not as easy with debits. Opening another free debit account is a hassle for 2 months :) – Alexus May 14 '18 at 22:10
  • to be clear I don't mean using it like a debit card by putting in the pin number. My debit card can be used just like a credit card and the retailer does not know the difference. – D Stanley May 14 '18 at 22:14
  • My debit card is a standard debit card that can be used as a credit card in some locations, but I pay $1 per transaction past 15 limit a month. It's a lot more than interest I will pay using credit card instead. – Alexus May 14 '18 at 23:19
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    @Alexus: Is that the way all the banks in your area are? I wouldn't tolerate that crap from a bank here in VA. – cHao May 14 '18 at 23:53
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AFAIK, credit card companies all calculate interest on a daily basis and will add it all up at the end of the billing cycle.

For example, if your billing cycle runs the 1st - 30th of a given month and you purchased something for $1000 on the 1st and spent an additional $100 on the 15th, then you will accrue interest of (1/365th your APR * 1000 * 15) + (1/365th your APR * 1100 * 15).

If you pay off the entire $1100 balance after your statement is generated but before the end of the grace period, the interest amount calculated is waived. If you only pay part of the balance due (say, the minimum payment) then the interest will be added to your balance and will accrue interest itself.

It usually requires paying off two billing periods' statement balances in full to get the grace period back.

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In this case, do I get charged for 15 days of using the $100 at rate 12/365?

Sort of. At the end of each statement period, your average daily balance is computed, and the interest is charged on that at the rate of r/365 (some may use 360 - it depends on the terms of your card). So that additional $100 will factor into your daily balance for 15 of the 30/31 days in the statement period, and you'll get charged interest at the effective daily rate.

Of course, you can avoid all of this by using a debit card instead until you've paid back what you've borrowed. It's not the $100 that will kill you - it's the $1,000 that you already have on there that will never go away (and may actually grow) if you keep adding to the balance.

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At the end of the month, you will be charged 15 days interest for $1100, and 15 days interest for $1000 (adjusted for however many days are in the month).

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