help needed - Credit Card Rates - Very confusing!

2manyjds

Hi,

Please can someone help me, I need to work out which of my cards is the most expensive. Some calculate a monthly rate in the form 1.667% per month, others are alittle clearer and let me have the annual amount. All of this is very confusing, especially when all you want to do is check the amount of interest they have applied is correct. I telephoned two of the companies and both of the operators couldnt tell me how to go about turning a monthly interest rate into an APR !?

I understand that the OFT has received a supercompaint from Which? (April 2007) about the confusing ways in which Credit Cards state the amount of interest payable. Hopefully this will lead to clearer documentation in future!

YorkshireBoy

APR = ((1+(m/100))^12-1)*100

Where m = the monthly rate (without the % sign)

So, using your 1.667% monthly example, the APR is...

((1+(1.667/100))^12-1)*100 = 21.9% APR

BLUESUNSHINE_2

YorkshireBoy wrote: »

APR = ((1+(m/100))^12-1)*100

Where m = the monthly rate (without the % sign)

So, using your 1.667% monthly example, the APR is...

((1+(1.667/100))^12-1)*100 = 21.9% APR

Lillys_mum

it confused me too until my husband explained it.

we are paying 1.527 per month which is 19.9%APR!!!!

Not the 15.9% that we were told by sky when we took out the card.

nomoneytoday

Divide by 100 = 0.01527
Add 1 = 1.01527
Power it 12 times = 1.19944
Subtract 1 = 0.19944
Multiply by 100 = 19.9%

And the other

Divide by 100 = 0.01667
Add 1 = 1.01667
Power it 12 times = 1.219439
Subtract 1 = 0.219439
Multiply by 100 = 21.9%

wyebird

=(((((A1/100)+1)^12)-1)*100)

If you copy the formula into and excel spreadsheet, and type your monthly rate into cell A1 it will calculate it for you.

Mozette

There are some VERY clever folk on this thread! Maths was never my favourite subject...

PBA

The formula only works for cards where there's no annual fee.