Calculating interest rates

sirasira

I have a credit card balance of £4392; with £556 of this charged at 16.6% since the interest free period ended for new purchases. The remainder of the balance is interest free til the end of the year.

At the same time another card has offered me a rate of 6.95% on full balance transfers for the life of the balance.

How can I calculate which is the better deal. I am paying minimum payments at the moment. So would I be better converting to a loan?

How do I work these options out? Can anyone advise me please.

dylanuk

For a rough guide - this assumes your minimum payment clears the interest each month and doesn't reduce the balance at all.

1.3% x 556 x 12 = £86.74 interest a year approx. ((16.6 - 1)/12 to get the monthly rate)

0.495% x 4392 x 12 = £260.88 interest a year approx. ((6.95 - 1)/12) to get the monthly rate)

This is all rough approximations, including the monthly interest rates, but gives you an idea. There's a bt calc here with deals: http://www.credit-card-comparison-online.co.uk/compare/balance-transfer.asp and here too: http://www.stoozing.com/btcalc.htm which might help.

Robert_Sterling

I do not think that your reply will leave the OP any the wiser.
Even you do not say which is the better option.

CLAPTON

well lets just look at the next year

if you stay are you are you will pay
-interest of £556 x 16.6% = £92
-the rest on 0%

if you BT the entire £4392 to a 6.95% card then you pay
4392 x 6.95% = £305 assuming no BT fee


so for a year at least best to leave things alone


however to work out the total after a year then there are too many unknowns