6.9% L.O.B. comparable to a loan of 6.9%?

Flashfly

Rang up yesterday to cancel my Mint card in the hope that I'd get offered a new 0% BT deal or a good Life of Balance deal. I got offered 6.9% L.O.B.

It got me thinking - Is a credit card's 6.9% APR for the life of the balance equivalent to a bank loan's 6.9% APR?

Thanks, Flashfly.

dc

No it is better, roughly half the cost. Interest is calculated monthly on the credit card and reduces as the balance is paid off each month. Very much like an overdraft, and you choose the length of time to repay, longest is to just pay the reducing minimum requested, a fixed or an increased amount when you wish. Totally flexible, I can recommend.

With a loan the interest is added to the amount borrowed at the start, together with any "arrangement fees" for the duration of the loan. then you repay a fixed amount till the total is repaid.

Flashfly

Glad I didn't tell them to get stuffed then!

Thanks.

Flashfly

Now I've managed to get myself really confused.

Lets assume I borrow £9000 at 6.9% APR over 5yrs from Cahoot. Based on the details from moneysupermarket this is a payment of £176.90pm totaling £10,614. Therefore the total interest paid is £1,614.

Reading over on the this thread
http://forums.moneysavingexpert.com/showthread.html?t=45657
it seems that these figures are based on a month by month interest calculations over the life of the loan.

So isn't this the same as the way interest is charged on a Credit Card? Therefore how can a Credit Card be half the cost with the same APR as a loan?

Sorry if I am being dumb.

dc

Sorry it is me that is not up to date, missing the term APR. In the past when I have borrowed money from banks they have front loaded the loans and charged full annual interest over the total of the loan disregarding the amounts paid off,(pre APR) similar to car finance companies. It seems regulation has forced them to operate more openly and charge interest on a monthly or daily rate. But with the credit card you are still more in charge of the end game and no possible early penalty payments either.
Good grief, honest bankers what is the world coming too.

Apologies dc, Rip Van Winkle in disguise.

Flashfly

Thanks DC,

Going to give their offer some thought. I have a good limit with Mint that I probably wouldn't get on the Amex LOB offer.

I like the idea of the Credit Card being fully flexible month by month.

Flashfly.