calculating interest

foxychik

help!

i have applied for the ba amex to take advantage of life of balance deal. i want to calculate how long it will take to pay off my debt. how do i calculate the amount of interest monthly?

will be a silly question to all you experts out there, i know

thanks

Joe_Bloggs

There a no numbers to work within your post. How long it takes depends upon how much you can pay. What happens if you don't get your card. What debts are you facing ? Try posting in the debt-free wannabe forum if debts are an issue. Read the 'sticky' posts at the top.
J_B.

foxychik

hi, thanks for your reply. i just wanted to know the formula for working out the monthly interest. i've worked it out myself in the past from a credit card bill, but as i've been 'tarting' for ages, i don't have one i can use.
for eg. if i transferred £2000 to the card at 4.9% for life of balance and paid £200 month off, what would the interest be the first, then second month?

grumbler

Monthly interest is (Excel notation):

=(1+4.9%)^(1/12) Result: 0.003994=0.3994%

For small APR below 10% you can use more simple approximate formula:

=4.9%/12 Result: 0.4083%

First month:
Starting balance: 2000
Interest: =2000*0.3994% Result: 7.99

Second month:
Starting balance: =2000+7.99-200 Result: 1807.99
Interest: .....

In fact figures are slightly different if you pay £200 not at the begining of every month, but later on the payment date.

foxychik

thank you for your reply. exactly what i was after!

now i can set up standing order for what i can afford to pay and accurately work out my debt free date without worrying about changing cards every 6-9 months.

next challenge is to reduce spending - wish me luck!!!

grumbler

I think it is better to set up a Direct Debit for minimum payments and a Standing Order for extra payments.

foxychik

something i hadn't thought of.

was hoping to have everything in place so paid debt off without my intervention but after your comment i am reconsidering

nelly_2

Dont do minimum repayments, well keep paying the same amount off each month.

read this


http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1095079865,8297,