Interest on a credit card

Bluezulu

Many many sir

Bluezulu

Cash advance

Marcio45

As it was cash advance there is also a 3% charge of the amount withdrawn. That is the cash advance fee.

And then the interest. Normally cash advances have higher interest rate than purchases. But most prime cards wont charge more than 30% for cash advances (there might be exceptions). For 50% interest rate we would probably be talking about the likes of vanquis, aqua or capital one, mainly subprime cards.

As you say you paid it in six months, so in the worst case scenario you would pay 25% interest (50% annual), aprox. £650. Maybee plus cash advance fees: 3% of £2600 which is £76. This is a very simplistic calculation, but in real life as you have to make monthly payments the interest will be lower.

What i suspect might have happened is that you friend did not make the monthly payments as required, while waiting for you to pay him back. If this is what happened then late fees, maybee returned direct debits, the fees soon add up.

To finalise, you need to check with your friend what is he actually asking you to pay.

ViolaLass

You didn't think to clarify how much you would have to repay before borrowing the money?

CakeCrusader

Do you know what sort of card he used? Do you have any paperwork? The max amount for most sub prime credit cards is 2.5-3k, APRs are anything from 39.9% to 59.9%, and none of these would amount to £1,200 interest on a £2,600 cash advance which was only borrowed for a few months (Vanquis charge 59.9% interest and on a £1900 balance the interest would be about £350/400ish). It looks as though he's telling porkies about the interest he has to pay to make money out of you.

I'd be really wary about this as he sounds like a loan shark more than a friend, Shakin Steve's on the ball. If he's lending money and he's making up his own interest charges then he needs a proper consumer credit licence and you need proper paper work. It would be wise to pop and see your local CAB and ask for advice; https://www.citizensadvice.org.uk/debt-and-money/borrowing-money/types-of-borrowing/loans/loan-sharks/

Superscrooge

Bluezulu wrote: »

Hi all

Yes I did know it was being loaned off a credit card. Yes I did know there would be interest to pay.

What I wasn't expecting was the interest would be so high. I believe the interest on the card for cash advances is 49%. But I don't know how to calculate it. If I had a ballpark figure based on that. I will be able to speak to him with that in mind.
I've asked to see the statement, but he is reluctant to show me.

As one of the previous posters has said. I suspect I am charged for other items on the card.

Thank you all for your replies

I agree with previous posts £1200 seems much too high.

To simply things lets call it 50% annual interest over six months (half a year). So you would expect the interest to be approx 25% of £2600 which is £650

A separate cash advance fee might increase it to around £700 but certainly not £1200

ViolaLass

Were no payments made between September and February? If so, there would be late payment fees too.

chattychappy

If you agreed to pay his interest, ask to see the statements. If he is a "friend", he won't mind doing this.