How can i work out my apr

January20

Fruit_and_Nut_Case wrote: »

OK then. Use the calculator on this page.

Thank you but you see I want to understand it too

ETA: I'll google it

izools

When you raise something to the power you multiply it by itself.

E.g 3 ^ 7 is 3x3x3x3x3x3x3. 4 ^4 is 4x4x4x4.

It's otherwise known as an "Index" or an "Exponent" -

http://en.wikipedia.org/wiki/Exponentiation

Marco_Panettone

When I wanted to know I went with the simple formula of:

Pick up the phone, dial correct number and ask the card company.

Atom

Hey 3 out of 2 people have problems with maths!

CLAPTON

Atom wrote: »

Hey 3 out of 2 people have problems with maths!

I'm not sure that is right... there are three types of people in the world, those that understand maths and those that don't

CLAPTON

Marco_Panettone wrote: »

When I wanted to know I went with the simple formula of:

Pick up the phone, dial correct number and ask the card company.

but 3 out of 2 times they will get it wrong

oki25

All a cardpac monthly rate means is.....e.g rate 1.23 = every £100 in that balance will cost you £1.23 a month, its not to do with x 12

January20

izools wrote: »

When you raise something to the power you multiply it by itself.

E.g 3 ^ 7 is 3x3x3x3x3x3x3. 4 ^4 is 4x4x4x4.

It's otherwise known as an "Index" or an "Exponent" -

http://en.wikipedia.org/wiki/Exponentiation

Thank you! When I googled it and saw an example written the same way as I learned it at school, I knew exactly what you guys meant. I'd never come across the ^ sign as my field is languages.

CLAPTON wrote: »

I'm not sure that is right... there are three types of people in the world, those that understand maths and those that don't

:rotfl::rotfl:

I don't know what I am then I'm very good (even if I say so myself ) with arithmetics. I can add, divide, multiply and substract without any problems, but my trouble started at school when we did algebra. I could understand the basic formulas, but got lost on the more complicated stuff. I think as a teenager I gave up rather than tried. It's funny because for the past few days I've been wondering whether to do a maths class in the evening.

2sides2everystory

January20 wrote: »

It's funny because for the past few days I've been wondering whether to do a maths class in the evening.

Well some of what they might teach you at evening classes may help, but teaching yourself how to master CLAPTON's formula and also how to play with it in an Excel spreadsheet will assist you no end with your personal finance decisions.

Have you ever used Microsoft Excel and put some of your own financial numbers through their paces? CLAPTON's formula can quite easily be put into a spreadsheet. With your own numbers added, it can be very illuminating.

Maybe you don't know Excel yet. No matter. You can even input CLAPTON's formula using the calculator on your Windows computer (Click on Start/Run then type calc and then when the Calculator is open click on View in the menu and then select Scientific. You'll notice the Scientific View in Windows Calculator program has buttons for CLAPTON's brackets too. The button with xy on it is the one that does the same as CLAPTON's ^ symbol.

Example 1
Using the Windows calculator in Scientific View as above, take an example where your monthly interest rate is 1.8%

CLAPTON says you need to use ((1+x)^12) -1 where x is the monthly interest rate as a decimal.

Your x is 1.8% right? Yes but to express a percentage as a 'decimal fraction' you divide the percentage by 100 which simply moves the decimal point two places to the left so you get 0.018 . So x = .018

To convert it to the exact APR you do indeed use CLAPTON's formula and if you do it on the Windows Calculator you type

( ( 1 + . 0 1 8 ) then you hit the xy button which is CLAPTON's ^ and then you type 1 2 ) then type - 1 and finally type =

On the screen you will see 0.2387205315755279972962156695162 which you might only begin to recognise if you multiply it by 100 and that means simply move the decimal point two places to the right. You don't need to worry about quite so many figures after the decimal point of course, but you may soon realise that the APR you just calculated in this example where the monthly interest was 1.8% is actually a tad under 23.9% per year.


Example 2
Another example to try - If your monthly interest x is 1.5%, x expressed not as a percentage but as a simple decimal fraction becomes .015

In the Windows Calculator program, type

( ( 1 + . 0 1 5 ) then you hit the xy button which is CLAPTON's ^ and then you type 1 2 ) then type - 1 and finally type =

On the screen you will see 0.19561817146153525156129009790039 . Multiply that by 100 and you will realise you have calculated a number of a tad under 19.6 (per cent per year).

January20

Thank you 2sides2everystory - very useful! I followed your calculations with the scientific windows calculator and it was very easy.

I do use Excel for my finances to keep track of my budget but I've never calculated interest rates with it, so I've use the more basic functions.