New Egg minimum payment: 1% + interest if gt 2% of balance

anotherpaul_2

Zissou wrote: »

Ahh yes, I see now, whilst you are charged at 2%, the extra 1% actually goes towards paying off your balance! Is that it now?? So with a payment of £36, £24 or so is to pay the interest and the £12 is to actually come off my balance. Well that makes perfect sense, however that is not what is understood from the literature they have produced and to be honest if they just said that then I guess quite a few people would be happy with that gentle persuation to clear their balances!

That's correct, and you should be able to verify it from your next statement. It could certainly be worded better, I think. However, my interest rate is still 16.9% APR, so 1.3% per month rather than 2% (in fact 0% for the moment).

I must thank you though, because your post caused me to go and check the APR on my account and I noticed that my 0% deal ends at the start of April rather than the end of May, like I thought!

Incidentally, I think your annual interest calcuation should be:
annual_interest = ( (1 + monthly_interst) ^ 12 ) - 1
where monthly interest is the decimal value of interest, so 0.02008 and I think gives 0.26943, or 26.9% APR.

Having said that, I've recently started to doubt my calculations of interest rates...

Zissou_2

Well just in case anyone is interested, just spoke to a senior person at Egg who rang me on my request and to be honest I was quite impressed. I explained that I did not want to be out of pocket as a result of the £400 fiasco and she agreed to refund all egg charges, bank fines and direct debit fines as a result . When I mentioned about the wording of the new minimum payment charges, she commented that they had actually been praised over them from some regulating body, however I fear it may be the intent to get people to clear their debt they were commended on, not how "easy to understand" it is.