How does interest work with Petal?
When is interest charged? Interest on your revolving balance is charged daily—i.e., any part of your full Statement Balance that’s outstanding after your due date. You won’t be charged any interest on purchases that either a) aren’t on a statement yet or b) were paid off by the due date
How is it calculated? First, your Daily Periodic Rate is determined by dividing your APR by 365 days. Then, at the end of each day, that rate is applied to your revolving balance and the resulting interest charge is added to your revolving balance for the next day’s calculation.
When is it billed? You’ll be billed every month when your statement is available. On your statement date, the daily interest charges for the billing period (if any) will be added up and the total will be listed on the statement as “interest charged.”
When is it due? Your payment is due on your due date, which is always at least 21 days after you receive your monthly statement.
How can I pay less interest? If you carry a revolving balance, the sooner you pay it off, the less interest you’ll be charged. The easiest way to make sure you’re never charged any interest is to pay your full Statement Balance by the due date every month.
Here's an example to help explain:
- Your statement billing cycle is from July 1st to July 31st, and according to your statement (available August 1st), your payment is due on August 22nd. Starting on August 23rd, you’ll begin accruing interest on any purchases you made in July that you didn’t pay for in full by the August 22nd due date.
- So, if your Statement Balance was $500, and you paid $300 towards that balance by the due date, you’d have $200 remaining. That $200 would then become a revolving balance after the due date and you’d start accruing daily interest on it until you pay it off in full. You’d see the total interest charged over the prior month when your next statement is generated on September 1st.
Does Petal calculate interest the same way other credit card companies do?
Petal does things a little differently so that credit is simple for customers. Here’s how:
- With Petal, interest is only charged on revolving balances.
- When you don’t pay your full Statement Balance by your due date, the revolving balance is subject to daily interest. When that happens, most credit card companies charge interest on both your revolving balance and any new purchases you make. With Petal, you won’t be charged any interest on purchases that aren’t on a statement yet.
- Here’s an example: If you bought a couch for $1,000 today, that $1,000 isn’t due yet. But if you are carrying a revolving balance—say $15—most other credit card companies would start charging you daily interest right away on the $15 revolving balance and the new $1,000 purchase! We don’t think that’s fair. With Petal, you’d only be charged interest on the $15 revolving balance.
- In other words, you get a fresh start every month. It’s one of the many ways Petal makes credit easier for you.
- We make predicting your interest charges easier.
- Every time you make a payment, we help you estimate how much interest (if any) you’ll be charged next month if you don’t pay your full Statement Balance. We show you this number in dollars, not just interest rates, so you can see the impact of your payment decisions right away, and decide on the payment that works best for you.