Cut out and keep

david_hellier

As many of our CC companies are shy at telling us the APR on their cards, here's a little table you should stick on the fridge for the kids to learn:

Credit Card Rates

Monthly% APR%
1 12.68
1.1 14.02
1.2 15.38
1.3 16.76
1.4 18.15
1.5 19.56
1.6 20.98
1.7 22.42
1.8 23.87
1.9 25.34
2 26.82
2.1 28.32
2.2 29.84
2.3 31.37
2.4 32.92
2.5 34.48
2.6 36.07
2.7 37.67
2.8 39.29
2.9 40.92

Toomuchdebt

Ok call me stupid but how come 1% monthly doesn't equal 12% apr??

GingerSte

Because you're not doing 1% x 12. You're doing 1.01 (ie 1%) x 1.01 x 1.01 x 1.01 x 1.01 x 1.01 x 1.01 x 1.01 x 1.01 x 1.01 x 1.01 x 1.01 = 1.1268, or 12.68% apr.

Hope this helps.

Toomuchdebt

Ok I am definitely stupid but why is 1% equal to 1.01 and not 1.00??

chloe99_2

because 1.0 (ie one whole one) is equal to 100% and 0.01 is equal to one part in a hundred (ie 1%)

Toomuchdebt

I'm glad other people understand this cos I sure don't-I used to think I was quite intelligent before-lol

mountainofdebt

david_hellier wrote:

As many of our CC companies are shy at telling us the APR on their cards, here's a little table you should stick on the fridge for the kids to learn:

Credit Card Rates

Monthly% APR%
1 12.68
1.1 14.02
1.2 15.38
1.3 16.76
1.4 18.15
1.5 19.56
1.6 20.98
1.7 22.42
1.8 23.87
1.9 25.34
2 26.82
2.1 28.32
2.2 29.84
2.3 31.37
2.4 32.92
2.5 34.48
2.6 36.07
2.7 37.67
2.8 39.29
2.9 40.92

I've written to MBNA on this very subject - personally I think it is a very sneeky way of hiding what your true interest rate is.

david_hellier

Some CCs display the simple rate, so 1% would be 12%. This is to make their figures look better, but in reality, for example, if you owed £1000 and made no repayments, you would owe £1268 after 12 months, because of the interest charged on the interest at the end of each month. Of course you would have to pay 12 x late payment charges too!

CLAPTON

what david is saying is that e.g. 1% per month when compounded per year works out as 12.68 % APR

so suppose you owe 100
at the end of month 1
you owe 100+100x1%=101

at the end of month 2
you owe 101+101x1% = 102.01

at the end of month 3
you owe 102.01 + 102.01x1%

etc etc it is the wonder of compound interest i'm afraid

cattie1

AAAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHH!!!! MATHS!!!!!:eek: :eek: :eek: :eek: :eek: :eek: :eek: :eek:

*# runs and hides!!! *#

Toomuchdebt

CLAPTON wrote:

what david is saying is that e.g. 1% per month when compounded per year works out as 12.68 % APR

so suppose you owe 100
at the end of month 1
you owe 100+100x1%=101

at the end of month 2
you owe 101+101x1% = 102.01

at the end of month 3
you owe 102.01 + 102.01x1%

etc etc it is the wonder of compound interest i'm afraid

ohhhhh now I get it!!!We should have this as a sticky somewhere I think.