Credit Card Cash Advance Interest 31 October 2014 at 5:07PM edited 30 November -1 at 1:00AM in Credit Cards 2 replies 419 views

johnsmithy

Hi,

If you make a cash advance on your credit card, how much interest would you accrue monthly?

I understand when you make a cash advance, interest is added from the day you make the advance up until the day of your statement and increases over time until it is paid off.

What is the formula to work out the interest on a cash advance? I need an example so I can use it to base it on my own credit card details to work out the daily interest. From what I understand, a potential formula is:

Amount on Card x APR/365 - Is this correct to work out your daily interest?

Currently, I pay off my full debt at the end of each month and have never missed a payment, so I've never had late payment etc. Also, currently I have no outstanding debt as my overdraft has been paid off, though this shouldn't affect any of your credit card transactions.

I just wanted to get a reflection of what I could be expecting to pay in terms of interest at the end of the month as I am currently on half pay due to illness but I have some back-up in case the charges are more than I anticipated.

Thanks for your help.

Regards,
Robin

grumbler

robinmckay wrote: »

Amount on Card x APR/365 - Is this correct to work out your daily interest?

It's a good approximation, especially if APR isn't very high.

It's better to divide your monthly rate by 30.
It can be found in your statements.

The exact formula for the daily rate is (say, for 35% APR):
(1+0.35)^(1/365)-1

eskbanker

robinmckay wrote: »

I understand when you make a cash advance, interest is added from the day you make the advance up until the day of your statement and increases over time until it is paid off.

It typically goes on beyond repayment, in that on your first statement after the cash withdrawal it'll include an interest element, but only up to the statement date, so unless you pay it that day there will be another interest charge the following month to cover the time from first statement to repayment.

Probably stating the obvious but worth paying everything you possibly can on your card rather than converting to cash first....