Interest Rates - Beginner's Course

ventjoran

Hi all,

Been registered here a while but have been hiding under the carpet hoping my situation would get better by itself. In some ways it has - I now have had a job after a string of 3 redundancies in 4 years...

During these periods of unemployment, I maxed up EGG Credit Card (yup, I know! But really had no choice as had no payment protection - long story why...)

Right, now, I now have finally emerged from my hiding spot, in the far corner of the carpet, I am trying to work out how I could get myself out of my financial bottomles pit.

Had a look at Egg today; got a balance of -£4300 and have been paying minimum amount. Interests are said to be 21.9 variable at top of statement, but on statement, they are expresed in monthly rates: merchandise interest at 1.667 per month; cash interest at 1.941 per month. Can anyone explain to me how to understand these figures (I am OK with maths but can't understand how to work out the amount of money owed that is 'cash advance' and what is purchases)

Also, I am paying the minimum (yup, I know...) so every time I pay £86 or so, I've got £75 interest!!!

Any suggestions?

Am your typical 'poor credit' + other loan + wages allow me to pay a little more than minimum, but not enough to make a big difference...

Can anyone help with a 'beginner's guide to credit cards interest'?

thanks all

ventjoran

normanmark

Basically they show the annual interest rates at the top. Then the interest rates around 2% is the monthly interest rates.

The interest you'll see on your monthly statements will relate to the previous months statement. To fully understand where your interest is going you need to tally up what you've spent on the card in terms of purchases and cash withdrawals that you've made. Then you can start to see where the interest is going.


Your best bet currently is to look at moving the balance to a credit card with a 0% interest free period promotion that means you can pay off the debt without accruing interest on there.

Your best bet in the intrim though is to budget and to start paying off more than the minimum. Thats the only way its going to go down. I hope you've cut up the card? If you haven't i'd advise doing that asap.