Credit card interest calculation

berty2000

Hi,

I know it may be a stupid question for this site but i am hopless when it comes to numbers.

I have an outstanding balance within one of my credit card balances that belongs to someone else. For a period they stopped paying and contributing to the overall monthly repayment of 3% but as i really want to move this debt away or settle the card I need to work out how to charge interest or work out the relevant proportion owe by this person.

So, to summarize, i need to know the formula on how to see the monthly opening balance, apply payments and then calculate the interest to then revise the balance for the following month where i would do it again until i get to the present time and can tell them how much of the card debt is theirs and demonstrate why it is so high as a result of them not contributing for so long.

Many thanks for any help.


Rob.

Galstonian

If you know the monthly rate of interest charged it should be possible to work out roughly what is owed but all cards do things differently and if you have a mix of different interest rates being charged on the account it will complicate matters as will any ongoing purchases or other transactions. If you only have "old" purchases with no balance transfers or cash advances it should be reasonably straightforward.

It may even be simplest to strip out the other persons debt and apply interest and payments just to that to bring you up to the present.

A spreadsheet will help a great deal.

berty2000

Hi,

Fortunately the interest on their portion is fixed at 1.456 per month, however, when i work out the opening bal - payment then calculate interest my figure always seems to be a little off compared to the figure on the statement, if i let this go up until the present it may well affect the overall amount too much.

ie, opening at £1,649.04 - £54 = £1,595.04

£1,595.04 * 1.456% = £23.22. Statement says £21.97 with estimated next month £24.58

my closing bal = £1,618.26, statement £1,617.01

I must be doing something wrong surely?

Many thanks for your help.

Rob.

Galstonian

The reason I said "roughly" in my first post is because different issuers do different things. You may be paying interest on an average daily balance, they could compound daily but bill monthly, 1.456% per month might be for a standardised 30 day month, it is impossible to say exactly.

Its not so much doing something wrong as not doing things exactly the same. If you don't have the terms and conditions for the card which might explain it you could always ask the lender. Apart from that, going with a good approximation may be the best you can hope for.

berty2000

Hi Galstonian,

OK, many thanks for that, I will go with the approx then if i am going about it the right way, ultimately the other persons fault for dragging their heels so long and letting matters get complicated.

Rob.

jellyhead

my credit card works interest out daily so the amount of interest i am charged is more if i leave it until the payment due date, and less if i pay as soon as i get the statement. when i had somebody else owing money on my card i just charged them the monthly interest amount, like you've worked out. it may have been a tiny bit more than i was actually charged but sometimes it might have been less, depending on what time of the month they paid. as the difference would have been a pound or less we agreed that they would just pay their balance plus the 1.456 monthly interest (or whatever it was) - it's not worth arguing over such a small amount and as i was doing them a favour by letting them use my card they didn't really mind if i unwittingly made a few pennies profit out of them each month.