Okay, so we are working on getting debt free (who isn't?), and we are finally down to one loan left...a student loan. It's for about $835 now and every last cent we have is going towards getting rid of it.
Well, I was able to scrounge up $19.00 today to pay on it (it's my dh's) so I went to the account and saw that the loan I just paid off a week ago isn't paid off. Nope. They charged me interest so I had a 2cent balance on it
I guess my question is...how OFTEN do they charge you interest?? I pay on these 2 accounts every other friday (and sometimes inbetween) and it seems like every time I pay, I get charged a couple bucks in interest! WTH is up with that? I realize most debt accts charge every month...but this is definitely MORE than that...and that 2 freaking cents down right pissed me off.
Soooo...I paid $18 on the one loan and a DOLLAR on the loan with only 2 cents...that way i figure they'll *have* to close it...am i right?
I just looked at my credit report and found a loan that I paid off in 2007 now has a $325 balance. I paid it off and have the zero balance letter. So I would call and make sure they close it.
Interest in the balance X the rate X time (use 1 for years and divide by 365 for days). Generally with school loans you have to pay all the interest off before anything goes to principal. So if you making extra payments you have to pay the interest the accrued since the payment first. With a small balance and frequent payments it will be some strange tiny amounts.
Are you paying with paper checks? It could have taken a day or two longer to get to it destination than you thought and then you accumulated a little more interest
DH is out of town for the week, but i'll have him call monday to close it. The 2 cents was principle...not interest! WEIRD. Oh well, i'm sure the $1.00 will hold them over until monday when he can call and make sure it's closed...I'll have them send us a letter for proof. I don't want anything fishy to happen.
Originally Posted by beansmama
The 2 cents was principle...not interest! WEIRD.
The 2 cents left over was principal, yes - because you had apparently accrued 2 cents of interest between the time you checked the balance and the time they processed the payment. Payments go toward interest first, and whatever is left over goes to principal.
In general, you'd want to request what they call a payoff balance. It's an amount that accounts for interest for an amount of time that will probably cover the payment transit and processing.
When we paid off our student loan, we went to the bank in person and had them check the most current balance and wrote a check. We also got a paper confirmed that the loan is completely paid off and a little congratulations card.
I would suggest going to the bank in person for such an occasion.
Originally Posted by laohaire
In general, you'd want to request what they call a payoff balance. It's an amount that accounts for interest for an amount of time that will probably cover the payment transit and processing.
Yes this. The banks aren't out to get you, they bill so everything ties out to the day.
The same thing happened with my HELOC, even though I knew better! I still owe $2 or so of interest on the principal from the time I got the payoff amount online to when the payment posted.
I just had this happen with a student loan. My final payment was in March (debited from my checking account). In April, I checked online and saw that I still had a $.06 balance listed. But when my due date came around in April, it wasn't direct debited, so I called to figure out what to do about the $.06. The person I spoke to said that if you come within $5 (I think) of the amount due, they consider the loan paid off but that it takes 30 days before they will close it out.
Sure enough, a week or two after my April due date, the account was showing paid in full.
Request a payoff balance IN WRITING, then pay it and don't send them a single penny more. (If it's under $5 of new interest they just "write it off" anyway)
Expect a "paid in full" letter and if you don't get one call and demand one.
If you get a bill for some piddly ammount of interest, call and ask about your paid in full letter and remind them that you don't owe another penny and you have the payoff letter to prove it.
Once you have that payoff amount LETTER and proof that you paid that amount, you're finished.
Originally Posted by oneKnight
Request a payoff balance IN WRITING, then pay it and don't send them a single penny more. (If it's under $5 of new interest they just "write it off" anyway)
That only works if you pay it off the same day that the payoff statement is good for. Interest continues to accrue daily, which is why payoff statements say clearly on them that the payoff amount is good for X day.
Originally Posted by cristeen
That only works if you pay it off the same day that the payoff statement is good for. Interest continues to accrue daily, which is why payoff statements say clearly on them that the payoff amount is good for X day.
Um yeah, the letter I received said "send $x amount by xyz date and it will be considered paid off."
That's why you need that letter in writing, and proof that you paid that amount by the date required. Then you're finished, even if they try and send you another bill for $0.50
Yeah, when you request a payoff amount, they will give you a due date of usually 5-7 days in advance.
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