APR Rates

NickR80

Hello all I am a bit puzzled about my Credit Card and how to repay it...

I keep hearing/reading about how APR rates are different. And I want to ask,
if I pay back my Credit Card IN FULL and on time, do I pay the card issuer's
APR (in this case 35.9% or 36%) regardless? Say; I spend £50 do I pay back
around £68.00 within that month????

Deadbeat

If you pay in full and on time every month you will not pay any interest.

Have you received a statement yet? It will state this, as well as the date by which payment is due.

YorkshireBoy

Deadbeat wrote: »

If you pay in full and on time every month you will not pay any interest.

With one caveat...no cash or pseudo cash transactions.


EDIT: 2 caveats, the second being the card is not a Lloyds Advance or TSB Advance card, which both charge interest from day one on purchases too.

YorkshireBoy

NickR80 wrote: »

Say; I spend £50 do I pay back
around £68.00 within that month????

Even if you were paying interest, it wouldn't be that much for a month. Why?...because the 'A' in APR stands for annual. So a month's worth of interest would be (very roughly) a twelfth of this.

chattychappy

NickR80 wrote: »

Hello all I am a bit puzzled about my Credit Card and how to repay it...

I keep hearing/reading about how APR rates are different. And I want to ask,
if I pay back my Credit Card IN FULL and on time, do I pay the card issuer's
APR (in this case 35.9% or 36%) regardless? Say; I spend £50 do I pay back
around £68.00 within that month????

As above, if you pay in full you won't pay interest (except on cash, gambling etc.)

Even if you didn't pay back in full, you wouldn't pay as much interest as that. As a VERY ROUGH guide, divide the APR by 12 to get the monthly interest rate. So APR 36% is ROUGHLY 3%/month. A month's interest on £50 would therefore be about £1.50.

Very tempting to get into debt when the amounts look quite small like this - but of course it all builds up. If you only pay the minimum and go on spending, then the balance rises month-by-month and so does the interest.

Anthorn

Rather a lot of people will suggest that if you're going to pay off the full balance every month then APR is meaningless. That's true provided the full balance is actually paid off every month. But what about if you're strapped for cash that month or you want to buy something and pay it off over a few months or indeed you just forget to pay? Well, then you'll be hit with interest which could be as high as 59.9%.


That's the reason why I go for the best APR I can get even if I intend to clear the balance every month. Things happen!

InsideInsurance

Anthorn wrote: »

Rather a lot of people will suggest that if you're going to pay off the full balance every month then APR is meaningless. That's true provided the full balance is actually paid off every month.

There is another complication.....

APR is the cost of borrowing £1,200 for 12 months expressed as a percentage; this include both interest and fees.

So if you look at the British Airways Premier Plus credit card it has a 56.4% APR because of a £150 annual fee and a 19.9% interest rate. You could "ignore" the APR but you would still have to pay the annual fee even if you pay the card off in full each month.

andyfromotley

when you get your statement just pay off the total balance in full and you will pay no interest (assuming no cash etc)

If you buy something on the day after your statement is issued it will be free of interest until the day the following payment is due, that how you can get up to 56 days of no interest.

guesswho2000

Anthorn wrote: »

Rather a lot of people will suggest that if you're going to pay off the full balance every month then APR is meaningless. That's true provided the full balance is actually paid off every month. But what about if you're strapped for cash that month or you want to buy something and pay it off over a few months or indeed you just forget to pay? Well, then you'll be hit with interest which could be as high as 59.9%.


That's the reason why I go for the best APR I can get even if I intend to clear the balance every month. Things happen!

In that instance, you'd have a card specifically for that purpose perhaps, either an ongoing 6.9% or similar, or a 0% purchases intro period on a card.

As the long term low APR cards (mostly) don't offer the best rewards, I wouldn't use them for day to day spending. In fact some of the best for rewards are the Amex charge cards, which you can't hold a balance on.

Of course, YMMV. Some can't be bothered with the hassle of dealing with 10+ credit/charge cards!

Anthorn

InsideInsurance wrote: »

There is another complication.....

APR is the cost of borrowing £1,200 for 12 months expressed as a percentage; this include both interest and fees.

So if you look at the British Airways Premier Plus credit card it has a 56.4% APR because of a £150 annual fee and a 19.9% interest rate. You could "ignore" the APR but you would still have to pay the annual fee even if you pay the card off in full each month.

And perhaps another complication. The times they are a-changing and what's creeping in is that an APR is maintained for the life of the balance. So does that mean that the APR will be changed when the balance is cleared. Perhaps we should be waiting for the demise of free credit cards alongside the demise of free banking.

[Deleted User]

Anthorn wrote: »

what's creeping in is that an APR is maintained for the life of the balance. So does that mean that the APR will be changed when the balance is cleared.

Not changed as such but the underlying APR will then apply to new balances. A life of balance APR is just another form of BT. ie a promo rate.