Brain failure or go-slow

tommytynan123

I should know this but .. I'm tired and so is my brain cell. I havn't used a credit card for ages (70/30 my choice/their choice) although getting one is quite possible. Part of my own battle to get healthier was to avoid them. PS It's worked !! Normally, in the past, with 6 days to pay day I am struggling but this month I still have over £500 in my a/c. All thats beside the point.:T

My son is having a little trouble from a friend who paid for a holiday for my son, himself and 2 others on his card. Booked about 8 weeks ago and holiday is 3 weeks away. At booking time this friend knew that my son had been laid off and cash was tight but verbally said 'pay whenever' So far he/I have paid about £300 of the £450 total. This friend has now said to my son ''you owe me £300 still because of the interest over 2 - 3 months'' ????
If this friend had a balance of, say, £500 then what would be the min payment and how much of that would be interest ??? Based on for eg 15%. Thanks

Jigga

Minimum payment varies from lender to lender, however as £300 of the £450 has been paid over a period of 2 months (I’m assuming – holiday booked 8 weeks ago) at a mean of £150 per month, no lenders have min repayments of 33%.

A full year’s compound interest on £500 at 15% is £80.90 assuming it is daily compound. So even after a full year, somewhat less than £150 interest that this wonderful travelling companion is asking for.

Without knowing the dates of the repayments that now total 66% of the principle, even if we discount that and assume that nothing has been repaid, the compounded interest at 15% for 3 months would be £19.10.

So finally, what is friend’s interest rate? Well, if its £150 interest per quarter, multiply by 4 for a full year, which is £600, on a £450 principle, sounds like 133% to me.

[FONT=&quot]Glad I’m not going on this holiday. Sounds like there could be a few awkward moments. [/FONT]

CLAPTON

£500 at 15% over a full year is 500x15% = £75

so the full 500 over say three month is a max of £18.75 i.e. £75/4

so if he has paid off 300 the interest will be much less

Jigga

CLAPTON wrote: »

£500 at 15% over a full year is 500x15% = £75

so the full 500 over say three month is a max of £18.75 i.e. £75/4

so if he has paid off 300 the interest will be much less

All true with simple interest, I was working it out as daily compound interest as a credit card organisation would.

At this sort of level, the difference between the two is marginal, but both of our figures are a million miles away from supposedly owing £150 interest over a three month period on £450.