Anyone good at working out Credit Card interest and payments?

banja

banja

banja

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4 Aug 2006
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I have a hypothetical.

Say I spent £100 on my CC. But can't pay it all off when the bill comes around. Instead I pay the minimum amount (lets say 5% - £5) and instead I pay the balance (£95) the following month.

Let's say the interest rate on the card is 20%.

How much additional interest will I pay in total? Logic says 20% of £95 (£19) but I'm unsure, as that seems a lot, and I think the interest is split over the year? As you can see, not sure. Can anyone shed light on how it works?
 
One thing to realise when paying part payments on credit cards.

Say you buy something for £100, then make a part payment next month of £50, the interest in that month is calculated on the full balance of £100, not the reduced balance.
 
Mr.E. said:
Its 20% per annum not per month.
Click to expand...

So I add 20% to the total right from the start (ie after the first bill comes) then divide the interest amount by 12?

The credit card calculator doesn't answer my question, it just gives you a total cost.
 
My question simply is: after paying £5 the first month, how much will I owe the second month, assuming the above factors of £95 remaining at 20% APR.
 
100*0.2=20 (£20 interest per annum at 20% APR)
20/12=1.666.. (£20 interest divided to monthly amounts)
100+(1.6666...*2)=103.333.. (multiplied by 2 for the two months credit, added to total item value)

So £103 payable if fully paid off in 2 months. Payment amounts make no difference, if interest is charged on the original purchase rather than the existing balance.
 
If you only incur one months interest you'll pay about £1.67

If you trip into a second months chargable interest it'll be in the region of £3.32 total, unless you had paid some off in the interim month - in which case the interest would be lower.

Interest accrues on statement balance not on the original purchase amount (afaik)
 
Last edited:
Since when do you pay the interest on the original purchase amount?
Ever card I've ever had and seen you pay the interest on the outstanding balance.

If I purchase something for £1,000, pay off £900 and leave £100 on the card for more than a month I get charged interest on £100, not £1,000.
 
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