Credit interest v Loan interest

angel.cake_2

Not sure if this is a silly question or not, but would a credit card with, for example, 7.9% interest rate, accrue the same amount of interest over the same period of time as a loan with the same rate of 7.9%? (presuming all monthly payments were the same too).

I just wondered if credit card interest is applied differently therefore making the total interest over the same period higher than for a loan?

CLAPTON

yes for the same amount and same monthly payments

CannyJock

angel.cake wrote: »

Not sure if this is a silly question or not, but would a credit card with, for example, 7.9% interest rate, accrue the same amount of interest over the same period of time as a loan with the same rate of 7.9%? (presuming all monthly payments were the same too).

I just wondered if credit card interest is applied differently therefore making the total interest over the same period higher than for a loan?

Yes, if everything was identical then because you're comparing APR to APR it works out the same.

Big advantage with a credit card is that it's fully flexible to make overpayments. There's also the option that if you take a loan out at the start of a month, you can make "weekly" payments which will mean less interest than waiting till the end of the month to make a payment - because interest is calculated daily.

Big "advantage" (in the loosest term) with a loan is that the monthly repayments tend to be less but you pay it back over a much longer time - that's how the loan companies make more money from you

Given the two options and the same APR, I'd take the credit card every time.

angel.cake_2

Thanks for this. Looks like i was right in applying for a credit card instead :j