4.9% p.a over 48% Months

paul2978

Hi 

Ive had an offer my credit card of the above rate. 

Ive never done a balance transfer before and unfortunately at this time I currently need to.

Can some explain this to me in really simple terms how this would work, Ive had a loan before and it was all set out before I signed up.

say if I transferred £1000

is it that the loan would cost me £49 pounds spread over 4 years?

Or is it 4.9% fixed per year.

Sorry I find it all a bit confusing.

Many thanks for anyone that can advise me.

Asghar

It will be 4.9% per year, with the rate being fixed for four years.

So in theory £49 per year but you will not end up paying that. The rate is normally calculated monthly with each statement, so 0.4083% every month on the balance of the statement (4.9%/12).

The first month would add say £4.08, then if you pay off £25, the next month's statemant would be for £1004.08 - £25 = £979.08 and add £4.00 in interest this time.

That's how I see it anyway.

paul2978

thanks @Asgard
So if I pay it off quicker the rate would drop down on what I owe as well?

[Deleted User]

No. The rate stays the same, but  the interest is less as it is calculated on the reducing balance.

paul2978

sorry thats @Asghar

Asghar

paul2978 said:

thanks @Asgard
So if I pay it off quicker the rate would drop down on what I owe as well?

No, as stated by zx81, the interest rate stays the same over the four years, calculated at 0.4083% every month.

As you make payments every month the amount of interest added is less because its calculated on a lower balance each month.

RobM99

In essence, the quicker you pay it, the less interest you pay.