Credit Card Implied Interest Rate

StarShines

Hi all !

I am new to this forum. I have my credit card statements, and I don't know what is the interest rate I am paying.

I live in Saudi Arabia and I don't know how much the credit card maths is different from that in UK or US or other countries, so I need you help to know my interest rate.

The statement shows:


Previous Balance = 21,937
- Payment = -1,110
+ Financial charges = 511 (In Saudi Arabia, they use the word "Financial charges" instead of "interest".
= New Balance = 21,388 <---This is the total amount due.

Now how do I calculate the interest rate given these figures or do I need more figures in calculation?

I would be thankful for your kind help.

Regards.

chattychappy

Your average balance during the month was (21937+21388)/2 = 21662.

For a month, you paid 511 "interest". 511/21662 = 0.02359, or 2.359%

The annual equivalent will be ((1+0.02359)^12)-1 = 0.3229

So you're paying an APR of about 32%.

(I used the average balance as you didn't say exactly when your payment reached the account. But whenever it hit, the error in the APR above is less than 1%. It may also be that you have different balances on different rates or there are different charges in there. But again, the 32% figure is what it works out at overall.)

StarShines

Thank you for your reply. I really appreciate your help.

Have a nice day !!!

Cheer :beer:

StarShines

The statement date is always 25th of current month (in which the statement is issued)

The payment due date is always 20th of next month every month by the way.

So for January, I pay on 20th of Feb.

InsideInsurance

You need to check the rules of the card, I thought, in the UAE at least, that Shari compliant credit cards simply charged a fixed monthly fee. As such you cannot really calculate an interest rate because the same is paid if you have a $0, $100 or $10,000 balance.

bayzat

32% APR might seem very high compared to the US, but it is actually the average in the UAE

bayzat

Yes, but actually in Saudi Arabia most of the banks operate exactly like conventional, and would not be considered islamic banks, they just use the term finance charges instead of interest rate because otherwise that would imply they are doing something unIslamic.

Fruit_and_Nut_Case

bayzat wrote: »

32% APR might seem very high compared to the US, but it is actually the average in the UAE

FYI, this is a UK-based site.

bayzat

Actually there are two kinds of Islamic credit cards, some charge a fixed monthly fee while others charge a 'profit rate', which is similar to conventional card that charge interest

juliazaman

An implicit interest rate is the nominal interest rate implied by borrowing a fixed amount of money and returning a different amount of money in the future. For example, if you borrow $100,000 from your brother and promise to pay him back, the money plus an extra $25,000 in 5 years, you are paying an implicit interest rate.