How to calculate interest on balance transfer account - The Size of saving

Clariman

The aim of the Balance Transfer calculator is to give a pretty accurate (but not absolutely perfect) view of what the savings would be. All credit cards quote the APR by means of comparison which is why the calculator asks for the APR. The calculator then derives the compound monthly interest rate from the APR. With this and the other information provided, it calculates the interest charges, minimum payments and balances on a month by month basis.

I agree that it would be slightly more accurate if the calculator worked out the daily interest rate and then worked out how many days were in each month etc., but I think that would be taking it too far for little return. Of course, the true calculation of APR is even more complex than an annualised version of a monthly or daily compound interest rate, so it would never be 100% accurate.

I stand by the calculators as they currently work because they do give a pretty accurate picture and they take into account more factors than most (e.g. MSE's stoozing calculator doesn't take into account BT fees etc.).

Clariman

griffster

Thanks for the replies here. I can appreciate the difference in figures here being due to the calculator being an as close as figure, however a difference £160 to £520 in interest charged is not a trivial difference. What can account for the difference in the site's calculation to the calculation from your site please, clariman?

I think the ts and cs mention they charge interest on a daily rate basis. Not sure but will check later.