Calculating a single months' interest in advance??

tain · 17 October 2017 at 9:59AM

This might be super simple, so forgive me if it is!

All I want to do is to know how much interest I'm likely to be charged on my credit card balance, before I get my bill this month.

I've looked online for a calculator, but they all seem to just want to tell me how long it will be until I can pay the whole thing off, and the interest accumulated across the entire period. I just need to know this month!

So for instance, if I had a balance of £1500, I pay off £400, what will my bank charge me in interest on the remaining £1100 at 18.9% APR? Is it just plain 18.9% so £207?? I'm sure that's not accurate. Is it £207 / 12 to get the monthly from the annual?

Aside from this, it seems REALLY difficult to find out my APR from online banking with First Direct. Should it really be this difficult?

[Deleted User] · 17 October 2017 at 10:04AM

The A is APR stands for annual. So it's not 18.9% every month, but over a year.

Interest is calculated daily. So for an accurate figure, you find your daily rate (use an online tool), and calculate the interest each day.

This will include interest on the £400 until it's paid off. Interest is only waived if you clear your balance in full each month.

If you want a rough figure, find your monthly rate and calculate the interest on the average balance you'll have for most of the month.

Failing that, just look at the estimated interest bit on your statement.

tain · 17 October 2017 at 10:12AM

Deleted_User wrote: »

The A is APR stands for annual. So it's not 18.9% every month, but over a year.

Interest is calculated daily. So for an accurate figure, you find your daily rate (use an online tool), and calculate the interest each day.

This will include interest on the £400 until it's paid off. Interest is only waived if you clear your balance in full each month.

If you want a rough figure, find your monthly rate and calculate the interest on the average balance you'll have for most of the month.

Failing that, just look at the estimated interest bit on your statement.

I haven't got a statement as I need the information before that, and my last statement is too old for my online banking to report on.

So if I'm not paying off in full, there's little point in me paying £400 to reduce interest, if I'm able to pay off in full the following month anyway? As it will always charge me the full balance interest?

So to explain: I can pay off the full balance in two months' of my pay, but not one. I could very very much use the extra cash from this coming months' pay (I've just bought a new home), rather than next month. So I may as well save that money for spending now, and pay a bigger chunk next month? Or am I calculating that wrong?

I'm not really following the connection between daily interest and monthly interest. If an online calculator is saying I'm due to pay 88p a day, and the balance on my card is consistent across the month, I simply add up 31 x 88p, so about £27?

tain · 17 October 2017 at 10:17AM

Actually, I think I've seen my error in the above statement, as my average balance will be much higher if I bulk the payment to clear it in the second month.

Still, this allows me to work out if £10-20 extra interest next month is worth an extra £1000 in my pocket this month, which is precisely what I need. Cheers! (Unless I've calculated my daily interest wrong! 18.9 / 365 * 31)

[Deleted User] · 17 October 2017 at 10:25AM

tain wrote: »

Actually, I think I've seen my error in the above statement, as my average balance will be much higher if I bulk the payment to clear it in the second month.

Exactly that. Lots of people think there's no point in paying anything off if they get charged interest until it's cleared.

But the less you owe, the less you pay.

[Deleted User] · 17 October 2017 at 8:20PM

18% APR is 1.5% APR per month so a balance of £1000 would attract interest of £15 that month in its simplest terms.

[Deleted User] · 17 October 2017 at 9:21PM

£17-09, for that month.

If you pay a further £400 each subsequent month (and don't spend anything on the card), then in the following months the interest you would be charged is £11-51, £5-27 and £0-00.

Calculating a single months' interest in advance??

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