How do you work the % out?

carl310166

The is probably a very simple question but,

I am trying to get a personal loan transfered onto a 2.9% credit card for life.

The loan is approx 14k,so how do you work out,

A: The monthly payment.

B: The minimum monthly payment.

or is it the same?

I rang MBNA last night and they said to ring the cutomer loyalty dept during office hours,which i will do on monday.

Thanks in advance.

sly_dog_jonah

If your annual interest rate is X%, then the monthly interest rate is:

((1+X/100)^(1/12)-1)*100

So 2.9% Annual Interest works out at a monthly rate of 0.239%.

MBNA's minimum payment is £5 of the outstanding balance plus interest charges (plus any other charges due). So your monthly interest will be 0.239%*14k = £33.39, and the total minimum payment is £38.39 or thereabouts.

Of course if you pay it off more quickly, the interest per month will decrease more rapidly. If you only pay back the minimum it would take 2800 months!

carl310166

Thanks whosyadaddy,

If i can manage to get a deal from MBNA,i will continue to pay the £300 per month i am paying now,plus i want to save in another account so i can pay it all off in 12 months? or so.

Robert_Sterling_3

The interest on my outstanding balance of £15000 on a credit card is 0% per annum at present but the minimum monthly repayment is 3% of the outstanding balance. i.e. £450 per month. [ It is not an MBNA card ]

Milarky

Just to point out that lenders often seem to add a bit to the stated 'APR' in order to squeeze out the pennies...

e.g '2.9' APR will become 2.949 % pa [the '49' being rounded down in the quoted rate but being there non-the-less]

How much difference does this make? Not much really - '2.900' = 0.2385% per month whilst '2.949' = 0.24249% per month.

[BTW My Barclaycard offer of '2.9' APR shows on my statement as '0.242%', so possibly they have rounded to 3 sig fig]

carl310166

I am confused now.

I had worked my 14k out at £406 before whosyadaddy replied.

robert shillings 3% minimum payment is £450.

How is this?

I am new to this game (as if you couldn't tell) so bear with me!

paint

I work out your first monthly payment on £14k at 2.9% as 453.46.

capital payment = 3% of 14,000 = 420
interest payment = (0.239/100) *14,000 = 33.46

generally the minimum payment is 3% of balance or £5, whichever is greater.  

I calculate your next one as follows:

outstnding balance now = 13546.54
capital payment = 3% of 13546.54 = 406.4
interest payment = 0.239/100) *13546.54 = 32.38
total next payment = 438.78

Hope the above is right as this is how I've been working mine out today!

Robert_Sterling_3

As stated in my post above the minimum monthly repayment is 3% of the outstanding balance.
i.e  3% of  £15,000
Which is  £450.
There is no interest charged at all.
I have to pay back 3% of the outstanding balance.
Next month it will be 3% of £14550.
And so on.

sly_dog_jonah

MBNA's minimum payment is £5 of the outstanding balance plus interest charges (plus any other charges due). So your monthly interest will be 0.239%*14k = £33.39, and the total minimum payment is £38.39 or thereabouts.

As i stated in my original post, I was using MBNA's terms to calculate the minimum payment. Other companies have different ways of calculating minimum payments. You only quoted MBNA so that what I worked out for you, as I don't know the T&Cs of every other CC company out there.

MBNA Platinum card has the following minimum payment conditions:

Monthly Minimum Payment: The lesser of:
2.25% of your balance (minimum £5) or charges for Payment Protection Cover plus interest and fees plus £5 or the balance, if this is less than £5.

I'm not sure that MBNA offer a 'life of balance' card though, so you may have to look elsewhere or be disciplined enough to surf the short-term 0% deals.