Interest on credit cards- newbie question
Discussion
I may need for the first time to have to use my credit card in the next couple of weeks, how much interest should I expect to pay on a £500 purchase at 16.9% apr variable if its not going to be paid back for about 6-8 weeks? I have no idea how this works having never used my credit card, had a loan etc etc (it exists for emergencies, I'd rather not use it but I don't have much choice) Ive been told that on a £1000 purchase at those rates I'd be charged around £10 per month if I paid back £50 a month, sound about right?
The following assumes my brain and my log tables are working. Both are dangerous assumptions so don't take it as the truth.
16.9%pa is approx 1.3% per month. However credit cards only charge you any interest if you don't clear the entire balance by the due date.
If your statement date is the 1st then you might have to pay by the 21st (different providers have different timescales). So in this case if you can arrange to buy whatever it is you need on the 2nd of the month and then pay it all back by the 21st of the following month you will pay no interest. If you buy it on the 31st so it appears on the statement the next day and leave most of it to ride for a month you will get charged about £6.50 for one month's interest and the same in succeeding months assuming the debt doesn't change.
If you buy midway through a statement period and don't clear then in the first month you get charged interest from the date of purchase rather than the date of the statement, which means the interest on the second statement (first one that has interest) will be for more than one month. Long time since I did this though, I clear them every month now so I might be mis-remembering about when the interest starts accumulating.
16.9%pa is approx 1.3% per month. However credit cards only charge you any interest if you don't clear the entire balance by the due date.
If your statement date is the 1st then you might have to pay by the 21st (different providers have different timescales). So in this case if you can arrange to buy whatever it is you need on the 2nd of the month and then pay it all back by the 21st of the following month you will pay no interest. If you buy it on the 31st so it appears on the statement the next day and leave most of it to ride for a month you will get charged about £6.50 for one month's interest and the same in succeeding months assuming the debt doesn't change.
If you buy midway through a statement period and don't clear then in the first month you get charged interest from the date of purchase rather than the date of the statement, which means the interest on the second statement (first one that has interest) will be for more than one month. Long time since I did this though, I clear them every month now so I might be mis-remembering about when the interest starts accumulating.
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