A finance expert has warned that a common credit card payment mistake is costing households thousands of pounds in unnecessary interest. Antonia Medlicott, founder and managing director of financial education company Investing Insiders, highlighted that many Brits are paying interest because they do not clear their balance in full each month.
Interest-Free Period Disappears with Partial Payment
Medlicott explained that all credit cards offer an interest-free spending period, typically around 56 days. If the full amount is paid by the due date, no interest is charged. However, she stressed: “Miss even one penny from your bill, and that interest-free benefit disappears.”
According to Medlicott, credit card interest accrues daily from the date of each transaction. This interest is waived only if the balance is paid in full. “Anything less than that, and you’ll be charged interest for the whole period, as if you hadn’t paid anything off at all,” she said.
Trailing Interest Can Catch Borrowers Off Guard
Even if a borrower pays off the entire balance the following month, they may still see an interest charge on the next statement. This is due to trailing interest, which can only be cleared by paying the balance in full for two consecutive months.
Medlicott also noted that the minimum payment shown on credit card statements is calculated as interest charges plus around one percent of the balance. While this protects against mounting debt, it is far from sufficient to clear the debt quickly.
More than 65% of Brits own a credit card, yet many are still paying unnecessary interest because they do not clear their balance in full each month.
