How does credit card interest work?

[Deleted User]

Hi there,

I've only ever used credit cards for their promotional rates but my current card's rate is due to end and I'd like to work out what the monthly interest is going to cost me...

I have approximately £320 of new purchases left on my M&S card (15.9%) and I expect to clear that next month so I should only accrue 1 months interest. Is it as simple as working out 15.9% of £320 per month, eg. £50.88?

Thanks in advance!

Paul_the_Painter

Your credit card statement will almost certainly show a monthly interest rate, the 15.9% is an annual interest rate.

The actual amount of interest would be more like £4.25, for 1 month

Fruit_and_Nut_Case

Paul_the_Painter wrote: »

Your credit card statement will almost certainly show a monthly interest rate, the 15.9% is an annual interest rate.

The actual amount of interest would be more like £4.25, for 1 month

It's worth mentioning that even if you pay it off there will still be "trailing interest" (of pennies) the following month so don't go cancelling any direct debit too quickly. Keep checking your statements until the balance is actually zero.

AMG762

This may give you a rough idea...

http://www.which.co.uk/money/credit-cards-and-loans/reviews-ns/credit-cards/repayment-calculator/