Comparing Interest Rates

Legacy_user

I'm just trying to juggle my mortgage with credit cards, savings accounts and overdrafts.

I have just noticed I have an overdraft with First Direct that I have never used, which has a rate of 10.9% EAR. Is this directly comparable with APR. I think my Northern Rock APR is 5.99%.

How are APR and EAR calculated? In my own records I would like to predict interest earnt and due but first of all I need to know the calculation!

It seems APR etc gives you an easy comparison but hides the real truth!!

Joe_Bloggs

@davegillian
I have heard of Annual Equivalent Rate (AER) but not perhaps Equivalent Annual Rate (EAR). I'm sure that things over a year will work out the same.
In the long term APR for mortgages is often misleading but is a guide to how poor the rate will become if you don't remortgage when the discount ends, keeping the mortgage for the whole term.
In the short term mortgage APR will be strongly influenced by fees that may dominate the underlying interest rate.

J_B.
Miss mortgage payments and your home could be repossesed. Miss other payments and you trash your credit record. If debt is out of control then seek advice.