Interest charges (at a daily rate) advice?

cwilson1983

Hi,

I have read Martin's guide to interest charges but have a question that I hope you can help clear up.

I have a HSBC credit card, with 16.9% APR. In the small print on the statement it states,

"How interest is charged:
Interest is charged on a daily basis from the date each transaction is applied to the account."

On a balance of approx £50, I am told that estimated interest charge for next month would be £1.16.

Ok, so here is my confusion...

Will I be charged £1.16 every day, if "interest is charged at a daily rate" until I pay the bill?

Or,

Does the figure of £1.16 refer to the calculation made by the bank to work out daily interest over the period of a month (when I get a statement)? Meaning that I get charged £1.16 a month?

Thank in advance for any help to clarify this matter

CLAPTON

the estimated interest is for the whole period.... so if their assumptions are correct then you will be charged a total of 1.16 which will show on the next statement


daily interest simply means they look at your balance each day and charge you
daily balance x 16.9% (annual rate)/ 365 (days per year) approx.
the daily totals are added up and charged at the end of the statement period.
(Unless you pay in full each month when they cancel the interest charge)

moneysavingmarrow

£1.16 0n £50 for a month is 3.32% per month which I would have thought was a bit on the high side?
Or did you have a higher balance last month which you have paid down but left some trailing interest?

jd87

moneysavingmarrow wrote: »

£1.16 0n £50 for a month is 3.32% per month which I would have thought was a bit on the high side?
Or did you have a higher balance last month which you have paid down but left some trailing interest?

If my calculation is right then it's around 48% APR. High but not unbelievable.