Interest Charges

• Credit card companies give you one billing cycle to pay off your balance without accruing any interest charges. The Motley Fool financial website explains that you get to use the money for free during the grace period between the time your bill arrives and its due date. You can send the whole amount, the minimum monthly payment required by the card issuer, or any amount in between once you get the bill. Interest is charged on any amount that carries over to the next billing cycle.
  
  

Time Frame

• A federal law called the Credit CARD (Credit Card Accountability Responsibility and Disclosure) Act regulates credit card billing statements. The card issuer must mail your statement at least 21 days before the payment due date, according to the Board of Governors of the Federal Reserve System. You have that time period to pay off that month's balance without racking up any interest charges. The credit card company must give you an extra day if your due date falls on a weekend or holiday when payments are not processed. It can tack interest onto the balance if you miss the actual or adjusted due date.
  
  

Prevention

• You pay interest when you miss the due date, even if you send the full amount. The credit card company adds the interest onto your next statement. You also add a late payment to your credit reports, which can drop your credit score. Prevent this by using electronic payments to make sure your money is received before the cutoff. Send your check or money order early if you do not have electronic bill payment service through your bank. Offset postal delays by mailing it as quickly as possible after the bill arrives.
  
  

Considerations

• You might get a deal from your credit card company that lets you avoid interest even if you do not pay off your whole balance each month. Card issuers sometimes offer zero percent interest promotions to entice new customers. If you run up a balance under the promotion, and make additional purchases after it expires, you pay interest on those later purchases unless you pay them off immediately. The Board of Governors of the Federal Reserve System explains that your bank must apply your payment to the highest interest purchase on your account first, unless you ask it to put the money toward the deferred amount. It must apply your entire payment to the deferred purchase first for the last two months of the promotional period.