Residual interest is a common but often overlooked credit card charge. It can appear even after you've made a payment, which may be confusing to card holders.
Let's learn about residual interest and how to prevent it so you can keep your account in good standing and avoid surprise interest charges.
How residual interest works
Residual interest is the interest that accrues on your credit card balance between the end of one billing cycle and the day your payment posts. Credit card issuers must provide at least 21 days between your statement closing date (when your billing cycle ends) and your payment due date.
If you carry a balance from month to month, residual interest can accrue during this period. Even after you've submitted a payment, new interest may be added for the days between the statement closing date and your payment date.
If you pay your balance in full by the due date every month, you'll avoid residual interest thanks to your card's grace period. However, if you carry even a small balance forward, you may see residual interest appear on your next statement.
Residual interest and credit card policies
Most credit card issuers charge residual interest, but details can vary. Some may have different policies for specific types of transactions. For example, you may have a grace period for regular purchases but not for cash advances or balance transfers.
Before you apply for a credit card, review the card's terms and conditions to understand how residual interest is handled. Comparing these policies can help you choose the right card and manage your account effectively.
