How to calculate the full penalty interest on credit cards

Many people don’t know how to calculate overdue interest on credit cards. If you forget to repay for a few days, a week, a month, or three months, then How is interest calculated? How to calculate interest plus handling fee and overdue fee?

1. Full penalty interest

After the repayment deadline is exceeded, regardless of whether the credit card has made partial repayments that month, the card issuer will calculate the total consumption amount for the cardholder. interest.

If the cardholder spends 8,000 yuan on March 8, the bill received on April 7, the bill date, will show that the "amount due for the current period" is 8,000 yuan, and the "minimum repayment amount" ” is 800 yuan. If the cardholder repays 800 yuan according to the minimum repayment amount on April 25, the repayment date, then the recurring interest in the next statement on May 7 will be: 8,000 yuan × 0.05% × 48 days ( March 8 - April 25) + 7,200 yuan × 0.05% × 12 days (April 25 - May 7) = 192 yuan + 43.2 yuan = 235.2 yuan. If you only repaid 7,999 yuan on the repayment date, which is 1 yuan less, then the recurring interest in the statement on May 7th is: 8,000 yuan × 0.05% × 48 days + 1 yuan × 0.05% × 12 Day=192.006 yuan.

2. Interest accrual on outstanding payments

If the cardholder makes partial repayment, the repayment portion can be interest-free, and the bank only calculates interest on the outstanding portion.

The interest on the bill of 8,000 yuan underpaid is 0.03 yuan. The interest on the unpaid part means that if the cardholder makes partial repayment, the repaid part can get interest-free treatment. The bank will only pay interest on the unpaid part. Calculate interest. Interest is calculated based on the unpaid portion. The cardholder also consumed 8,000 yuan on March 8 and repaid 800 yuan according to the minimum repayment amount on April 25, the repayment date. The cardholder can enjoy the 800 yuan returned on this day. From the consumption date to the repayment date, the recurring interest on the bill on May 7 is: 7,200 yuan × 0.05% × 60 days (March 8-May 7) = 216 yuan, which is The full penalty interest can save 19.2 yuan. If you repay 7,999 yuan on April 25, and you pay 1 yuan less, then the recurring interest in the statement on May 7 is: 1 yuan × 0.05% × 60 days = 0.03 yuan, and the interest will be less than the full penalty The interest rate is significantly reduced, and you can pay 191.976 yuan less.

Tips to avoid "full penalty interest" on credit cards

How to effectively avoid full penalty interest on credit cards? It is a long-standing industry practice for various banks to charge full penalty interest for failure to repay credit card payments on time. Although some banks have eliminated the full penalty interest rate, most banks are still enforcing this practice. Even if a few cents are not repaid, the bank will charge an interest rate of 0.05% based on failure to repay in full. Here’s how to avoid full credit card penalty fees.

Tip 1: Remember the "repayment date". Bank credit cards have a "billing date" and a "repayment date". The "billing date" refers to the date when the card consumption is recorded, and the "repayment date" refers to the final repayment period for the card amount. For example, if Ms. Li's "accounting date" is the 20th of each month and her "repayment date" is the 10th of each month, then the consumption before the 20th of each month will be included in the current bill and will need to be returned on the 10th of the next month. The amount of credit card swiped in the current period. Of course, cardholders can choose to repay in full or in part. The former will not have any overdraft interest, while the latter will have to pay interest;

Tip 2: Return the minimum repayment amount to avoid "late payment fees" ". Banks now stipulate that when the cardholder fails to repay the minimum repayment amount by the due repayment date, in addition to charging interest in accordance with regulations, the bank will also charge a monthly fee of 5% on the unpaid minimum repayment amount. There is no upper limit on late payment fees, so even if you cannot repay in full, it is best to pay the "minimum repayment amount" to avoid being charged more fees;

Tip 3: Bind your bank card to automatically deduct money . It is most convenient to bind credit card repayments to automatic bank card deductions. If you activate the automatic repayment function, you can get it done once and for all. However, you need to pay attention to whether the funds in the debit card are sufficient to cover the credit card deductions. The most trouble-free repayment method is to bind your debit card and credit card and set up automatic deduction when due. For overdue repayments, banks will generally send text message reminders on the first day and will also give a 2-day grace period. In addition, people who are accustomed to online operations can also use online platforms to repay. Third-party payment companies such as Alipay and Lakala can also make repayments.

If you pay a large amount, such as decoration, buying a car, etc., you can also choose to pay in installments, but you will need to pay a certain fee. Under normal circumstances, the bound debit card and credit card need to be from the same bank, but some banks have made innovations. For example, China Guangfa Bank has opened a green inter-bank repayment channel. After signing the contract, cardholders can use online banking, mobile banking, Deposits from debit cards of designated banks will be transferred to Guangfa Credit Cards for free over the phone, and you can also choose the automatic transfer repayment method;

Tip 4: Enable text message reminders. Nowadays, many banks' credit cards will send reminder text messages to cardholders when their repayments are due, which can effectively prevent cardholders from forgetting.

Tip 5: Reasonably adjust the credit limit. Credit cards are characterized by overdraft consumption, but the higher the credit limit, the better. If the cardholder is worried that he will not be able to repay in time and owe a sky-high fine, he can apply to reduce the limit. Cardholders should also control the number of credit cards they have. Too many credit cards will inevitably make repayment more difficult. Generally speaking, it is enough for the cardholder to have a credit card that suits him or her.

Tip 6: Inter-bank transfers take time. Fully consider the time required for inter-bank transfers and repay the loan in advance. Most banks will send a text message to remind the cardholder on the first day that the credit card is overdue. Generally, banks will give a grace period of 2 days. As long as the payment is repaid within 2 days, it can be regarded as on-time repayment. At this time, cardholders are advised to use safer repayment methods such as counters or ATM machines that can ensure real-time payment to avoid the recurrence of overdue credit card repayments. For cardholders who make inter-bank online banking transfers, they must fully consider the time it may take for inter-bank transfers. For example, if inter-bank transfers take more than 2 working days, it is still recommended to use real-time payment method.

What is the full penalty interest on a credit card?

The full penalty interest means that after the repayment deadline is exceeded, regardless of whether there is partial repayment on the credit card that month, the card issuer will charge the remaining The cardholder will be charged interest based on the total consumption amount.

Penalty interest means that if the principal and interest of the loan cannot be repaid on time, the penalty interest will be calculated and charged according to the relevant regulations of the People's Bank of China. The so-called interest-free period refers to the period from the bank accounting date to the due repayment date. If the cardholder's monthly bill date is the 25th, and the cardholder swipes the card for consumption on March 26, the record will be settled on the bill on April 25, and May 15 is the due date for repayment. Cardholders who repay in full can enjoy an interest-free period of up to 50 days. However, the interest-free period is only for cardholders who repay in full on the due date. If they fail to repay the balance in full on the due date, they will not be able to enjoy the interest-free period. Currently, there are two internationally accepted credit card interest calculation methods: one is to calculate interest on the full amount, and the other is to calculate interest on the unpaid portion. Note: Most domestic banks calculate interest based on the full amount.

According to the full interest calculation method, if the cardholder fails to repay the full amount on the due date, even if the difference is only 1 cent, the full amount of the current bill will be charged 0.05%. Daily interest is calculated and compound interest is calculated monthly. Interest is calculated based on the unpaid portion, and you only need to pay the interest on the unpaid portion of the 1 cent, which saves a lot compared to calculating interest on the full amount.

If the cardholder fails to repay the minimum repayment amount before the due repayment date (inclusive), he shall pay the overdraft interest on the amount used from the accounting date to the repayment date, as well as the following: A late payment fee is paid on a percentage of the outstanding portion of the minimum payment. The proportion is stipulated by Bank of China Credit Card, which is 5% of the unpaid portion of the minimum repayment amount. For example, if the minimum repayment amount of the cardholder in the current period is 1,200 yuan, but the cardholder only repays 1,100 yuan in the current period, then he needs to pay (1200-1100) × 5% = 5 yuan late payment fee.

What are credit card full penalty interest and balance penalty interest?

I don’t know if you have noticed that there are similar provisions in the bank’s terms and conditions when applying for a credit card: If Party A fails to repay the entire amount owed on or before the due repayment date, the entire amount that should be repaid ( Including that Party A has repaid part of the amount) does not enjoy the interest-free repayment period, and overdraft interest will be calculated at the prescribed interest rate from the bank accounting date. To sum it up in four words - full penalty interest.

Recently, the Supreme People's Court drafted the "Regulations on Several Issues Concerning the Trial of Bank Card Civil Cases" (draft for comments), which mentioned that the people support cardholders in "choosing the minimum repayment method to repay credit card overdrafts" The minimum repayment amount has been paid and the overdraft interest will be calculated based on the outstanding overdraft amount from the accounting date to the repayment date." This incident has attracted widespread attention.

As for the bank’s penalty interest base for overdrafts using the minimum repayment method, the Supreme Court supports the penalty interest based on the balance. However, most banks now charge penalty interest based on the full amount, at least until the deadline. I have never heard of any bank that calculates the expected penalty interest on credit cards based on the unpaid portion.

So what are balance penalty interest and full penalty interest?

For example, if someone swipes 12,001.5 yuan with a credit card and chooses to only pay the minimum repayment amount every month , then, the penalty interest based on the balance means that the interest will be calculated based on the remaining principal according to the amount of repayment. For example, if 2,001 yuan is repaid, the interest will be calculated based on 10,000.5.

But the penalty interest based on the full amount is not the case. Even if this person has paid off 12,001 yuan and only has 5 cents left to pay back, the interest will continue to be calculated based on 12,001.5 yuan. The interest is already very high if you only pay the minimum repayment amount. The interest is usually calculated on a daily basis, 0.05%, until it is paid off. In other words, if it takes the person mentioned above to repay the loan in a year, the penalty will be the full amount. In terms of interest, the interest alone is almost two thousand two thousand. If calculated based on the simple annual interest rate, it exceeds 18%. This is definitely not a small amount, it is already comparable.

Judging from the above example, for most of us card users, balance penalty interest is definitely a good choice, but from the bank's perspective, the full penalty interest is the source of high income. Recently, the "Draft for Comments" drafted by the Supreme People's Court also indicates that the bank's full penalty interest policy will soon become history. It has to be said that such policies that benefit the people have always been what the residents of Cardiff have longed for.

I wonder if all of you card users have ever thought about this question: Will the emergence of balance penalty interest breed more bad credit debts? Because the expected balance penalty interest is no longer compound interest, even if a small part of the money is not repaid in the short term, the interest is acceptable. In this way, the bank will receive more bad debts.

Some people may say, aren't you obviously speaking for the bank? In fact, this is not the case. The point I want to express is the issue of "personal credit reporting". If there are too many bad debts, the bank will suffer losses as a result. , but from another perspective, it is actually easy for cardholders to fall into a misunderstanding. If they do not pay the full penalty interest, then the overdue interest is acceptable. Therefore, it is easy to ignore their own credit problems. Therefore, I have to remind everyone that even if there is no longer a full penalty interest rate, the credit reporting expectation policy has not changed. I hope that all cardholders can understand.

The "full penalty interest" clause of credit cards should be abolished

On June 6, the Supreme People's Court issued the "Regulations on Several Issues Concerning the Trial of Bank Card Civil Cases" (Draft for Comments) , which mentioned that the card-issuing bank failed to perform reasonable reminders and explanation obligations regarding the terms of "repaying credit card overdrafts according to the minimum repayment amount, and charging overdraft interest from the accounting date to the repayment date based on the entire overdraft amount." If cardholders advocate that overdraft interest be calculated based on the outstanding overdraft amount, the people should support it.

Currently, many banks in my country adopt the "full penalty interest" policy for credit cards. Since interest is calculated based on the full amount of the loan, no matter how much of the balance is outstanding in the end, the bank will charge interest based on the full amount. , resulting in many people failing to pay off their loans in time due to insufficient balances on their cards, and then forgetting about it, resulting in high penalty interest defaults. Similar news abounds, and there are even extreme cases where people were fined thousands of dollars for owing a few dollars, which is obviously unacceptable.

The "full penalty interest" of credit cards adopts a compound interest model in which the arrears are calculated on a daily basis and compound interest is charged on a monthly basis. In this way, once a default occurs, it will snowball as time goes by. This type of penalty interest imposes an extremely heavy burden on users. It can be seen that "full penalty interest" is wrong both emotionally and rationally, and it is imperative to revise it.

In recent years, there have been many cases caused by "full penalty interest", and many of them have been resolved through judicial channels. A typical example is Li Xiaodong, the host of CCTV's "Today's Statement". He spent 18,869.36 yuan with his credit card. Because the balance of the bound savings card was insufficient, 69.36 yuan was not paid off, and 317.43 yuan of interest accrued 10 days later. He was dissatisfied with the bank's "full penalty". interest" clause and took the bank to court. Ultimately, it was believed that the amount of compensation calculated by the bank's full penalty interest rule was too high for the losses caused by the cardholder's breach of contract and should be appropriately reduced, requiring the bank to return the excess deductions.

Although similar cases are mostly won by users, without the constraints of relevant regulations, credit card users still have no sense of security.

Previously, the central bank issued regulations recommending that banks negotiate with users on balance interest calculations and encourage banks to cancel the "full penalty interest". However, only one bank has abolished the full penalty interest. Obviously, the "full penalty interest" on credit cards is beneficial to banks. It is too difficult for banks to cancel it on their own initiative. This requires clearer regulations.

Currently, credit card income accounts for a large proportion of bank services. After the "full penalty interest" is abolished, it will inevitably affect the bank's income. And because banks adopt extensive management of credit card business and pursue scale too much while ignoring quality, the bad debt rate of credit cards is very high. High handling fees and "full penalty interest" are also used to make up for the gap.

In addition to abolishing the full penalty interest clause, banks will need to change their business strategies in the future and conduct refined management of credit card business. They need to use information technology to screen high-quality customer resources through big data, and according to customer Credit index arranges loans to reduce bad debt rate. In this regard, you can learn a lot from online platforms.

How to calculate the full penalty interest on a credit card (debit card)?

The full penalty interest on a credit card (debit card) means that if a credit card (debit card) holder has not repaid the loan beyond the final repayment deadline, the bank will charge it regardless of whether there is partial repayment in the month. Interest is charged on the entire consumption amount from the billing date to the repayment date.

That is to say, if you cannot repay on time, you will be charged two parts of interest: the interest accrued every day on the remaining outstanding amount from the repayment date to the time of repayment plus the first consumption date of the last month's bill All interest accrued daily from that day to the repayment date.

In this case, the interest charged will be very high, and many people have questioned the rationality of the full penalty interest. Therefore, the Supreme People’s Court recently issued a draft for comments, intending to abolish credit cards (debit cards). There is a full penalty, but it is still being processed. I don’t know if it can be cancelled, or I have to wait for notification.

This concludes the introduction to credit card bank penalty interest and credit card penalty interest. Have you found the information you need?