Credit Card Lessons Re-learned

I already knew this before but somehow forgot after some time of not using my credit card.

I wanted to earn lotsa miles and forgot about how finance charge was computed.

I thought that paying before the cut off date is enough to cancel out my payments (fyi: i still have a stagnant sum that i haven't paid off) but i thought wrong.

I forgot about the average daily balance computation! How stupid of me!

Average Daily Balance. This is the most common calculation method. It credits your account from the day payment is received by the issuer. To figure the balance due, the issuer totals the beginning balance for each day in the billing period and subtracts any credits made to your account that day. While new purchases may or may not be added to the balance, depending on your plan, cash advances typically are included. The resulting daily balances are added for the billing cycle. The total is then divided by the number of days in the billing period to get the "average daily balance."

So i spent around 33k during my billing cycle and paid these off around 2 days before my cut off date...then i checked my online account and saw an unusually high finance charge despite the fact that i paid out what i bought...

Sigh..now i understand! I should pay on the day I buy... in other words, for me, I shouldn't buy if I don't have immediate cash on hand!

I am putting this under my lessons re-learned...NEVER AGAIN!!!