Question re: varying interest due to type of transaction

owen22

Hi guys,

Here's the situation: my partner has got herself into a bit of a pickle and needs me to bail her out (which I'm happy to do).

Only problem is she needs to make an immediate payment, the only available funds I have are on a credit card but the ppl she needs to pay money to only accept cash/debit cards.

I know drawing cash on a credit card is the worst thing (value for money-wise) you can do and is charged at a much higher interest rate than normal purchases but if it comes to it I want to know how much it's gonna cost me.

How do CC companies work out the interest if say, the total debt on the card is £100, of which £75 was a shop purchase (at 15% interest) and £25 was drawn in cash (at 30% interest)... these are just example figures for ease of calculation BTW.

Obviously when you make a payment onto the card at the end of the month (if you're not clearing the debt in full) you can't apportion whether it covers your purchases or the cash withdrawl so what interest rate is the remaining total debt calculated at?

Sorry if I'm being thick...

Thanks in advance for any help you can give!

never-in-doubt

owen22 wrote: »

Hi guys,

Here's the situation: my partner has got herself into a bit of a pickle and needs me to bail her out (which I'm happy to do).

Only problem is she needs to make an immediate payment, the only available funds I have are on a credit card but the ppl she needs to pay money to only accept cash/debit cards.

I know drawing cash on a credit card is the worst thing (value for money-wise) you can do and is charged at a much higher interest rate than normal purchases but if it comes to it I want to know how much it's gonna cost me.

How do CC companies work out the interest if say, the total debt on the card is £100, of which £75 was a shop purchase (at 15% interest) and £25 was drawn in cash (at 30% interest)... these are just example figures for ease of calculation BTW.

Obviously when you make a payment onto the card at the end of the month (if you're not clearing the debt in full) you can't apportion whether it covers your purchases or the cash withdrawl so what rate is the remaining interest calculated at?

Sorry if I'm being thick...

Thanks in advance for any help you can give!

The people she owes money to, is it a DCA? If so, please name them.... LOL

never-in-doubt

CC companies work their apportions of funds differently. If you list what cards you have we could answer for you, but to be honest just go to the website and see the card terms (rates and charges) - look at summary details and this will show you.

Look here, for an example of mine - with Citi Gold - http://www.citibank.co.uk/personal/cards/cardsaa_rc.htm?type=cards&merchant=citi&offer=A258

The periods over which interest are charged are as follows:

Purchases, Cash Advances Transaction date repaid in full*

Balance Transfers, Credit Card Cheques, Flex Payments date debited to your Account repaid in full*

owen22

So if I'm reading it right the total debt moves onto the higher rate (30% in my example)???

CLAPTON

in simple terms

the 75 purchase will accrue interest of

75 x 15% x number of days owed /365

cash will accrue interest of

25 x 30% x number of days owed /365
plus normally a one off fee of 3%

where number of days owed is the number of days between spending the money and paying it off.

any part payment will go towards reducing the lowest APR debt (i.e. will come off the 75)

never-in-doubt

owen22 wrote: »

So if I'm reading it right the total debt moves onto the higher rate (30% in my example)???

It is specific to each card, some have the same rates and thus apportion wouldn't matter. Generally speaking, it will be classed as a cash advance and so would be charged at the higher rate. It is also applied immediately to your account with interest being due from the start. So you pay more interest on it, it also pays cash off last - after purchases. Taking cash from ATM is worst thing you could do. Cheaper to write a CC cheque and pay into your bank.

never-in-doubt

Thanks Clapton, well explained.

owen22

Ah okay...

So if, for example, I paid of £80 at the end of the 1st month the remaining £20 would be charged at 15%. If however I only paid of £50 the remaining £50 would be charged at 30%.

Is that right?

owen22

What is a "CC cheque" BTW?

never-in-doubt

owen22 wrote: »

What is a "CC cheque" BTW?

credit card - CC = Credit Card.

CRA = Credit reference Agency.... there are loads lol :beer:

owen22

It's a not a CRA, it's a credit card in her name that needs a minimum payment making on it today (hence why they won't accept a CC payment from me, even though my card isn't with them)

How do I get a chequebook for my CC?