You did not pay your statement balance (due to the balance transfer not being paid off too) therefore you will pay interest on those two transactions. The balance transfer aspect was still 0%, you just paid interest from the date of those two transactions to the date they were paid off.
There are several common reasons why cardholders are charged interest on zero balances. One of the most frequent causes is residual or trailing interest. This occurs when interest continues to accrue on a balance between when your statement is generated and when your payment is received.
If you're getting charged interest fees on your credit card despite not using it, here are a few possible reasons: Balance Transfer or Previous Purchases: If you have an outstanding balance from previous transactions, interest can accrue on that amount.
It could be that you were hit with trailing interest/residual interest. It is basically the interest calculated from the date of the last statement closing and to the day that you fully paid off your balance that hasn't shown up on any statement yet.
Interest is charged on a monthly basis in the form of a finance charge on your bill. Interest will accrue on a daily basis, between the time your next statement is issued and the due date, which means that you'll have an even larger balance due, even if you haven't used your card during that month.
Typically, you won't need to pay any interest charges when you have a balance of zero. If you have a zero balance because you never use the credit card, you may still need to pay certain fees. The credit card issuer may lower your credit limit or close the account if it's inactive for an extended period of time.
While a 0% utilization is certainly better than having a high CUR, it's not as good as something in the single digits. Depending on the scoring model used, some experts recommend aiming to keep your credit utilization rate at 10% (or below) as a healthy goal to get the best credit score.
Key Takeaways
You usually need a very high credit score to qualify for zero interest loans. Zero interest car loans usually come with a higher price tag, expensive extras and strict repayment terms. If you miss even one payment, you lose your 0% interest rate and get charged late fees.
To dispute a charge, send a letter to your credit card company's address for billing inquiries or errors. Your credit card company will investigate the dispute. If it resolves it in your favor, it will remove or fix the charge.
After the promotional period expires, you'll start accruing interest on any unpaid balances. That includes balances you charged or transferred to the credit card during the promotional APR period — not just new charges.
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
The introductory APR offer won't last forever
It is important to remember that 0 percent intro APR offers typically expire 12 to 21 months after opening the card. That provides a limited window of time in which to benefit, but it can also provide a false sense of security.
For example, if you're paying high interest on your credit card, moving the balance over to a 0% balance transfer card would mean you'd pay no interest until the deal ends. It can help you pay off the balance faster and pay less interest overall.
If you miss a payment, you don't owe back interest on previous purchases made during the introductory period. However, your current balance can start to accrue interest at the regular rate if the 0% offer is retracted. To avoid any additional costs, it's always best to pay your balance in full by the due date.
0% offers are for a set period of time
Your 0% interest rate is usually an introductory/promotional offer given to you for a limited time. Afterwards, any remaining introductory/promotional rate balance, will be charged at the card's standard rate.
Credit cards with 0% interest on purchases can be a good way to spread cost and build up your credit score. For example, you could use one to book flights, pay for a holiday or cover the cost of home improvements and then pay it back in monthly repayments.
As you might expect, the length of the interest-free period differs from card to card – but it can be anything between a few months and a few years. Of course, 0% on purchases shouldn't be confused with no costs at all, as you'll need to make at least a minimum repayment each month.
Suppose you use the 0 percent intro APR period to run up higher balances than usual. In that case, you might end up with a high credit utilization ratio that hurts your credit score.
A good guideline is the 30% rule: Use no more than 30% of your credit limit to keep your debt-to-credit ratio strong. Staying under 10% is even better. In a real-life budget, the 30% rule works like this: If you have a card with a $1,000 credit limit, it's best not to have more than a $300 balance at any time.
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
Residual interest, aka trailing interest, occurs when you carry a credit card balance from one month to the next. It builds up daily between the time your new statement is issued and the day your payment posts.
As long as you pay off your statement balance in full before the due date, you can continue making purchases on your credit card without paying interest until the next statement due date.
If you have a zero balance on credit accounts, you show you have paid back your borrowed money. A zero balance won't harm or help your credit. To find out how we got here, we have to understand what credit is and the history of credit agencies.