How Will My 29% interest credit card work?

KayleighTwyman

Hi so I have been accepted for a credit card from Asda with a limit of 2000 however the interest is 29%APR I want to use this 2000 towards a holiday in November once I have cut my other debts down to the bare minimum which will be by April time which is when I want to use the 2000. The interest free period is 50 days so after this from what I work out is the interest on 2000 would be 377 pounds per month or minimum payment!! Surely this cannot be right? Really really confused about this and want to know roughly about minimum payments and interest before using it.
Thank you

[Deleted User]

How on earth are you working that out?

Your minimum payment will be 1% of the balance plus fees and interest.

So £20 for the 1%, plus interest per month (around 2.5%) is another £50ish.

So call it £70 for the first month and declining thereafter.

Still a very expensive way to go on holiday.

KayleighTwyman

Ok thank you, that has come as such relief and feel rather silly, didn't think that it could possibly be anywhere near that but I am not an experienced credit card user, only ever had one which I am currently paying off.

YorkshireBoy

It's 29.9% APR, which equates to 2.21% per month. 2.21% of £2,000 is £44.20

There will be no 50 day interest free period, as you'll not be settling the balance in full.

So your first minimum payment will be £20 + £44.20 = £64.20 (or somewhere near that!).

Superscrooge

KayleighTwyman wrote: »

Ok thank you, that has come as such relief and feel rather silly, didn't think that it could possibly be anywhere near that but I am not an experienced credit card user, only ever had one which I am currently paying off.

It would be worth you looking at the minimum repayment calculator so you appreciate just how expensive your £2,000 holiday will be and how long it will take to pay off the debt if you only make minimum payments. The total cost and length of time to pay off the debt always surprises people.

http://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card#calc

A4445

Just out of interest do you have any defaults or missed payment on your credit report as 29.9% seems super night for a "normal card"

Ben8282

You don't say what your other debts are and 'bare minimum' could mean anything.
zx81's calculation looks good to me so the interest will be about £50 and the minimum payment about £70 each month. But as others have pointed out, if you make only the minimum payment it will take forever to repay the £2000.
If you are not going on holiday until November is it really necessary to pay for it in April? The longer you can put off paying for the holiday the more you can save up for it and reduce the amount that you will have to pay interest on or even better use the money to pay off your other debts in their entirety rather than reducing them to the bare minimum and then perhaps try to obtain a 0% purchase card to pay for your holiday with. The ASDA card I believe is very good for cashback if you pay in full every month but not really the best card to be planning to have an interest bearing balance on.

phona

I'm concerned by how far off the mark you were with your estimate of £377/month interest. Do you understand how others on this thread came up with the £70/month minimum payment? I'm sure we can add more details to help you understand if you like.

£2000 is a huge amount to be spending on a holiday - even for folk who actually have that money. Wouldn't you be better saving and going another year?

I get the impression you're not good with numbers. Couple that with spending loads of cash you don't have on something that doesn't even leave you with an asset (something to sell) and your existing debts, this starts to sound like a recipe for disaster.

Please, please think very carefully about this. £70/month might not sound much, but it would take you over 25 years to pay off (according to http://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card#calc)

chuckley

OP you sounds like someone that really shouldn't have a credit card.

especially since it's for £2000 for a holiday when you're still debt clearing!