How Bank of America Calculates Your Credit Card Interest

If you have a Bank of America credit card you may not be aware of how they calculate interest in the event you don’t pay off the card every month. I typically pay it in full every month, but because of extensive travel I had to estimate what my upcoming payment was going to be and I came up about $700 short of the full payoff. I went on to make my next trip and racked up about $3000 in charges that month, which of course would be paid in full with my next bill payment.

To my surprize I was slapped with a $54 “finance charge” with no explanation whatsoever! Even online my statements and online info gave me absolutely no indication of how that amount was calculated, or for what period of time. After a 45 minute conversation with BofA I learned the dirty little secret that they try so hard to hide from their customers.

They didn’t charge me interest only on the unpaid balance. They charged me nearly 18% interest on the balance, plus every penny I spent to add the balance for every day, for the entire month! To add insult to injury, I had made several payments early during the next month, but they did not apply those payments to the “average daily balance” until the END of the billing period, allowing them to charge me 18% interest on the $3500 I spent that month, even though that was not my balance. They held the month in a different account, paying me nothing for it, while charging me interest in the account it should have been applied to.

When I asked to have the ridiculous 18% interest rate reviewed, they told me that the bank would determine when I “qualified” for a rate reduction. My perfect credit score means nothing.

MORAL OF THE STORY: If you don’t pay off your credit card EVERY MONTH, stop using that card!! The banks are NOT your friend. The banks are here to fuck you over every opportunity they get.

For me, I will research the fine print in the bank’s policies before giving them my money.