Credit Card Interest Rates

2tired2tango

Hi
Sorry to sound dumb but i thought it would be better to ask first than be caught out later,
So i have just received my 1st credit card ever, I am fairly sure ive got things right but i thought i would get some advise before i even activate it

The APR is 39.9%
Say i buy something for £100 then pay off the minimum at the end of the month, say £5,
On next months bill i would have £37 in interest charges added making the total bill £132

monthly purchase rate 2.839%
Again if i bought something for £100 at the end of the month the total to pay back would be roughly £103

Monthly cash/cheque interest rate 3.433%
so i take £100 out the cash machine i would have to pay back roughly £104

Is this correct ?

eskbanker

2tired2tango wrote: »

The APR is 39.9%
Say i buy something for £100 then pay off the minimum at the end of the month, say £5,
On next months bill i would have £37 in interest charges added making the total bill £132

No, the A in APR is annual, so if you bought something for £100, you'd owe £139.90 after a year if you made no minimum payments (ignoring late payment fees, etc), so if you only paid £5 off, then there'd be £95 x 2.839% interest added to the next month's statement.

2tired2tango wrote: »

monthly purchase rate 2.839%
Again if i bought something for £100 at the end of the month the total to pay back would be roughly £103

If you paid it back in full following your next monthly statement then it would just be £100, but as above then if you didn't the residual balance (after minimum or any other payment) would have 2.839% added on the next statement.

2tired2tango wrote: »

Monthly cash/cheque interest rate 3.433%
so i take £100 out the cash machine i would have to pay back roughly £104

Yes, plus you'd pay a one-off cash withdrawal fee.

2tired2tango

Im glad i came here first.I much prefer your explanation as i thought the figures were to high for me.. .

Thanks eskbanker you just saved me from cutting up the card

CLAPTON

2tired2tango wrote: »

Im glad i came here first.I much prefer your explanation as i thought the figures were to high for me.. .

Thanks eskbanker you just saved me from cutting up the card

nevertheless, I would strongly advise that you always paid the bill in full and don't start paying interest.

2tired2tango

Yes Im planning to, I hate paying interest on anything . maybe later on when i get a decent credit score and maybe a lower APR card i can relax a bit but at 39.9% it would just be wasting money.
Ill just be using it as an emergency tool like if i have a bill to pay a few days before payday then as soon as im paid i'll just payback the card

[Deleted User]

2tired2tango wrote: »

Ill just be using it as an emergency tool like if i have a bill to pay a few days before payday then as soon as im paid i'll just payback the card

Don't do this.

Use it regularly and then pay in full when the statement comes in, nor before.

dresdendave

2tired2tango wrote: »

Ill just be using it as an emergency tool like if i have a bill to pay a few days before payday then as soon as im paid i'll just payback the card

If this is your plan then the interest rate is irrelevant.


However if you want to build a positive credit history then follow ZX81's advice in the previous post.

Dobbibill

2tired2tango wrote: »

Hi
Monthly cash/cheque interest rate 3.433%
so i take £100 out the cash machine i would have to pay back roughly £104

DON'T DO THIS either - especially if you are using it to build your credit history, cash withdrawal are marked as a separate entry on your CR. It will have a huge negative impact.

Follow the above advice, use in small amounts, say for fuel or groceries and pay off IN FULL on your due date.

Remember, if you don't pay off in full they not only add interest to your purchases but interest to your interest......it's not worth it.

2tired2tango

Don't do this.

Use it regularly and then pay in full when the statement comes in, nor before.

Follow the above advice, use in small amounts, say for fuel or groceries and pay off IN FULL on your due date.

Why is this, if i bought something on the 1st and can afford to pay the CC back on the 10th surely it wont make any difference. the balance is still paid off,

molerat

The balance will be paid off but there will not be a usage history on the card to aid your credit file, the statement balances reported will be £0. It is better to show £100 statement balance and a £100 payment.

[Deleted User]

You're looking to build a history of sensible credit usage - or at least, you should be.

If you pay before the statement, you risk having your credit file look as if you don't use the card, as the lender could report a permanent zero balance.