Paying interest confusion?

francesca_sunflower

Ive just got a Barclaycard Platinum, now, I am confused about how interest is charged, this is my first try at getting credit, and have yet to use it. Before I do, I really want to understand what exact interest will be charged. Here are the rates, 16.9%p.a and 1.313% monthly on purchases (I never intend to withdraw cash, which is at a different rate)

Now for example If I made a purchase of £200, and paid off only £50 in the first month, I'd have £150 to pay off, Now what would I incur in interest for not paying in full in one month?

16.9%
1.313% or... (I have found a statement which has confused me like mad :S)

How is interest charged on my Barclaycard account?
If full payment is not received, interest is charged based on an Average Daily Balance on the account. This is calculated by adding up the outstanding balance on your account each day and dividing by the number of days in the month. The sooner you make a payment to your account, the lower your Average Daily Balance will be and the less interest you will pay.
If you don't pay your bill in full, Barclaycard has a minimum interest charge of 50p.


Now what the heck does that mean?


?


According to that, I'd be charged daily interest.. If reading right, £150 x 30 days(which Is when I'd next make a payment)= £4500 DIVIDE THAT by 30 days = £150... So does that mean I pay..


1.313% interest £1.80 (roughly)
16.9% interest £23ish (roughly)
or according to the statment I found, another £150?


Please help me, I am so confused, I am really not down with having a balance of £150 and then having an interest of £150 added on the next month!?

opinions4u

You will pay interest, calculated on a daily basis, on the full £200. As soon as the receive the £50, you will pay interest on the lower balance of £150 (plus whatever interest has already been added).

Day1: Spend £200
Day25: Get statement - show's no interest added.
Day31: £50 received by card company
Day31: A month of interest added at 1.313% of £200 = £2.63 ... new balance of £152.63

You will carry on accruing interest on a daily basis that gets added once a month. But until you clear the full balance, including accrued interest that may not yet have appeared on your statement, you will continue to generate an interest charge.

Best advice: clear the balance in full and never pay interest!

*there are one or two assumptions on statement dates and interest dates above, along with a suggestion that a calendar month is exactly 1/12th of a year.

francesca_sunflower

Im confused by what it means to pay DAILY interest, based on 1.313% isnt daily interest something small like 0.0012% or something?

francesca_sunflower

Ooooh hang on, the statement I found on the barclays website, means, The average mean balance? Not my balance times by 31, divided by 31 = the actual amount of interest. Did I just interpret the statement wrong? It just means My balance of 150 if it stays that way is just 1.313% of 150. Or if Ive spent an extra £20 and then another £40 etc and odd different balances, they just work out what balance to charge interest on (all the balances divided by 30 will get me the average mean?

bengal-stripe

The interest is calculated daily, based on your balance at close of business, then added up and charged once a month (presuming you are not in the habit of paying the card in full.)

The daily rate is 16.9%, divided by 365.