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You will not be charged interest on each new purchase for a minimum grace period of 21 days if you pay the new balance total in full by the total minimum payment due date for the account statement on which such new purchase first appears. You will always be charged interest on balance transfers, access cheques, deposits and cash advances from the date such transactions occur."

This statement is from my credit card. I feel this sentence is too complicated for me to understand. Is it saying that after I buy something with my credit card, I have to pay off its full amount in 21 days in order to not be charging any interest? So I have to pay twice a month in order to not pay any interest?

Can someone explain the first sentence in a grammatical way?

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    It's more like somewhere between 21-52 days, if you keep paying the the balance on the statement "in full" in time (by the total minimum payment due date). When you buy something, it will appear on the next month statement. – Damkerng T. Jan 8 '14 at 19:21
  • @DamkerngT. I misread the minimum to maximum, which scared me... but why would they say minimum of 21 days, which seems like an useless statement? – Alex Jan 8 '14 at 19:23
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    I think this link might be able to explain better than I can do, creditcards.com/credit-card-news/…. The minimum part guarantees you that if you don't fall out of grace, you have at least 21 days to purchase things in advance. – Damkerng T. Jan 8 '14 at 19:27
  • @DamkerngT. Thanks a lot! Your article refreshed my world view! – Alex Jan 8 '14 at 19:44
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    @DamkerngT. You are sincere and always get better response in comments. Once the OP agrees to your comment as an answer, you may post it as the answer. It not only helps you get higher rank but we shall also have 'answered questions' on this board as a completed process. – Maulik V Jan 9 '14 at 5:17
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Legal writing is not the most comprehensible in any language. As described in the page Legal writing, "Perhaps most obviously, legalese suffers from being less comprehensible to the general public than plain English, which can be particularly important in both private (e.g., contracts) and public matters ..."

It is always wise to read legal document carefully.

One way that I found effective to deal with legal writing is to parse it mechanically. This works because the main goals of legal writing are accuracy and precision. Here is how I would parse it,

You will not be charged interest (on each new purchase) (for a minimum grace period of 21 days) (if you pay the new balance total in full) (by the total minimum payment due date for the account statement) (on which such new purchase first appears).

Here is how we can interpret the sentence:

  • You will not be charged interest on each new purchase.
  • You will not be charged so for a minimum grace period of 21 days.
  • On the condition that you pay the new balance total in full
  • And you must pay so no later than the mentioned due date (the total minimum payment due date as printed on the account statement)
  • The mentioned account statement is the one that the new purchase first appears in.

It might still be not quite easy to understand, even after broken down like that, but that's the nature of legal writing. The trickiest part is the term grace period.

The "minimum grace period" part guarantees you that if you don't "fall out of grace", you have at least 21 days to purchase things in advance.

And because when you make a new purchase, its record will appear on the next month statement, the actual number of days you can make a purchase before you need to actually pay your money would be somewhere between 21-52 days (i.e., the grace period plus number of days in a month). In short, you need to pay only once a month. Be sure to pay no later than the due date.

This link might be able to explain the "grace period" in more details: http://www.creditcards.com/credit-card-news/grace-period-avoid-paying-interest.php.

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Sadly, legal English often seems to favour long sentences with minimal punctuation. Attempting to extract the important parts:

You will not be charged interest ... for a minimum ... period of 21 days, [as long as] you pay the new balance total in full, by the total minimum payment due date.

What this means in practise is that there will be a cut-off date 21 days before this month's due date. Any purchases made on or before the cut-off will be charged on this month's due date. Any purchases made after the cut-off will be charged on next month's due date.

Hence there will always be at least 21 days between a purchase and the due date. The maximum will be 52 days, for any purchases made the day after the cut-off (in months with 31 days).

So you only need to make one payment a month, on the due date.

  • I am pretty sure it also means that if you don't pay the full balance of the card (NOT the minimum required payment) you will be charged interest for that first 21 days. – horatio Jan 9 '14 at 16:30
  • @horatio: the quoted paragraph doesn't specify; we'd need to see the rest of the terms & conditions. But given that interest isn't usually calculated retroactively, I would guess that interest would only start to be applied from the due date, not from the date of purchase. Note, however, that interest is charged immediately on the other things listed, such as cash advances. – Steve Melnikoff Jan 9 '14 at 17:27
  • True, but from experience I am fairly certain. Note also "[grace period] if you pay[...]" – horatio Jan 9 '14 at 17:49
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What it means is that every month, you get a statement for purchases which were made previously. This is issued on a "statement date", and includes purchases that may have happened almost a month ago, or purchases that just happened very recently: perhaps on the statement date. You then have a "grace period" to pay the statement. There is a "due date" which is later than the "statement date": 21 days later.

All the purchases listed in the statement are interest-free if you pay the full statement amount by the due date. This means that for the most recent items, there is a 21 day interest-free period. For items purchased early in the statement period, the interest-free period is longer than 21 days. Hence the 21 days is a "minimum".

What is really obscure are the rules for what happens if you do not pay the full statement amount by the due date: specifically, how you recover your "interest free status" in that case.

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