Credit Card Interest - Can't figure it out!

Simon7685

Having finally found my interest rates for my Vanquis card, I have been trying to work out how they get to their interest amounts quoted on the statements. I can't get to anywhere near this figure, so thought I would see if someone can get to their figure for me???
It is from my very first Vanquis statement, the only paper one I have. It's not a necessity but I am curious how they get to what they do.

Statement Date = 01/08/11
Previous Balance = £0.00

Purchase amount = £20.99
Purchase Date = 01/07/11

Min Payment = £5.00 by 26/08/11
Estimated Interest = £1.81:eek:
Purchase Interest = 3.990%

I did 20.99 - 5.00 = 15.99
15.99 * 3.990% = 0.638001
0.64/30 * 56 = £1.20

Tixy

You are incorrect to be deducting the £5 from your calculation.

The estimated interest assumes that you will pay the minimum payment on the due date, so you would have borrowed £20.99 for 56 days (roughly £1.56), and then assumes you will owe £15.99 from the date of payment (26/08/11) to the date of the next statement (say 1/9/11) - so roughly 7days - approx £0.16.

Not quite the figure they come to - but not far off.

Simon7685

I never thought of that bit but I still get it to a bit less, like I said it's not necessity to know but I would like to know how they get to their £1.81.

20.99 * 3.990% = 0.837501
0.84/31*56 = 1.52

20.99-5.00=15.99*3.990%=0.64
0.64/31*5=0.10

1.52 + 0.10 = £1.62

So where does the other 19p come from?
Any ideas anyone???

bigadaj

I wouldn't worry about it too much, just make sure you pay off in full every month and it won't bother you, carrying interest on a sub prime credit card is like giving a piggy back to a sumo wrestler.

CLAPTON

it would seem unlikely that the calculation is based on the 3.990% monthly rate as months are varible in length.
I would guess (but don't know for sure) that it is actually based on a 'daily' rate.

jacobschi

I normally pay off my c/card in full but last months Nat West c/card was £1,544.00 so I paid £1,000.00 prior to due date and with this months spending left a new bal of £1,384.00 which includes interest charges of £28.80!!! Don't know how the arrived at so much? People beware base rate maybe low but it's not reflected in bank charges!!!!

jacobschi

BEWARE NATWEST delays still going on!! Paid in £120 cash & £450 cheque in to my branch Saturday. As of 18.45hrs Monday, not credited to my account!!! Answer given by bank for delay " because cash paid in with cheque it takes a working day(Monday) for it to be credited to my account"??? So they locked my cash away for nearly 72hrs!!!( if it shows on Tuesday am!)

Tixy

jacobschi wrote: »

I normally pay off my c/card in full but last months Nat West c/card was £1,544.00 so I paid £1,000.00 prior to due date and with this months spending left a new bal of £1,384.00 which includes interest charges of £28.80!!! Don't know how the arrived at so much? People beware base rate maybe low but it's not reflected in bank charges!!!!

If you don't pay off the balance in full then you are charged interest on the whole balance - ie the £1544, not just the outstanding amount after you paid £1000 off.
Thats because credit card's only give you up to 56 days interest free credit if you clear the balance in full.

Not sure about the comment about base rate and bank charges - I don't know of any credit cards that have a base rate tracker APR on purchases. You will be charged interest at the APR as per your credit card terms & conditions (or later amendments to it). Which you agreed to.

Simon7685

bigadaj wrote: »

I wouldn't worry about it too much, just make sure you pay off in full every month and it won't bother you, carrying interest on a sub prime credit card is like giving a piggy back to a sumo wrestler.

Just to clarify........

I always pay off my cards in full every month. I was merely confused as to how they could get the amount they stated on this statement, as no matter how I try to do it I can't get close to the £1.81.

mgarl10024

Nope - I can't get it either. I've tried a few different ways now.

I mean, even if you did the worst case and had the whole 2mths at £20.99 (ignoring the minimum payment), you still only get 20.99*0.0399*2 = £1.70.

There's something I don't understand here either. Interesting.

Simon7685

I have tried this umpteen ways to get it to £1.81 and cant do it. Would anyone else who has Vanquis and gets a paper statement put up some of their info so we can see if it ever works out, to what they say it's going to be?

I am really interested now as to how they work these things out, sad I know but it's bugging me now;)