Calculating Credit Card Interest

skint_48

I am convinced that I have been overcharged by my credit card provider.  I calculated the interest I believed I should pay and have provided the credit card provider with my calculation.  The company has refused to provide details of the way it calculates interest because it is “too complicated”.  I used the following calculation:  Compound interest = p x (1+r)to the power of n.  The amount borrowed is p, the rate is r and the number of times the rate is applied is n.  I owed £272.60 (p) for 65 days (n) and £7.50 (p) for 30 days (n) at a daily interest rate of 0.0407814% (r).  The credit card company provided me with the daily rate it charges on my credit card.  The company has charged me nearly three times the amount I calculated.  I haves not been told what is wrong with my formula.  Also, if any other service provider issued a bill which was three times what a customer had expected, the customer is within his/her rights to ask for an explanation.

Can anyone help me with the calculation i have made?  Does anyone else believe they have been overcharged?

[Deleted User]

If you hold a balance on the card and do not pay it in full you are charged interest on the whole statement balance regardless of how much is left on the card

Whatever calculations or sums you create are moot because the bank is not going to change your interest charge just because you think your numbers are better.

eskbanker

skint_48 said:

I owed £272.60 (p) for 65 days (n) and £7.50 (p) for 30 days (n) at a daily interest rate of 0.0407814% (r).

If you owed exactly the same amount for a longer period than two statement cycles, it sounds like you may have failed to make a scheduled repayment, which will incur a charge, is that perhaps part of the issue?

Rather than just seeing it as a maths formula issue, it'll perhaps be easier for people to understand if you post more detail about the various statement balances and payment dates, plus the charges that were levied?

grumbler

skint_48 said:

Can anyone help me with the calculation i have made?  Does anyone else believe they have been overcharged?

The formula looks OK. How on earth can anybody help without seeing all figures and the calculations?!

And no, I don't believe.

mcpitman

skint_48 said:

I am convinced that I have been overcharged by my credit card provider.  I calculated the interest I believed I should pay and have provided the credit card provider with my calculation.  The company has refused to provide details of the way it calculates interest because it is “too complicated”.  I used the following calculation:  Compound interest = p x (1+r)to the power of n.  The amount borrowed is p, the rate is r and the number of times the rate is applied is n.  I owed £272.60 (p) for 65 days (n) and £7.50 (p) for 30 days (n) at a daily interest rate of 0.0407814% (r).  The credit card company provided me with the daily rate it charges on my credit card.  The company has charged me nearly three times the amount I calculated.  I haves not been told what is wrong with my formula.  Also, if any other service provider issued a bill which was three times what a customer had expected, the customer is within his/her rights to ask for an explanation.

Can anyone help me with the calculation i have made?  Does anyone else believe they have been overcharged?

Formula looks ok.

Your calculations need to start from the correct period of charging for the interest though. As said in a thread above, not paying the full balance off triggers the interest from when the transaction was made.

I doubt they will be overcharging, this stuff is pretty carefully calculated and regulated.

Lots more numbers needed to define right/wrong.

AmityNeon

It is highly unlikely you have been overcharged. The explanation is there, but you need to read the full terms and conditions of your product and reconcile them with your account, day by day if necessary, to understand what has happened, because accumulated fees/charges in totality are more complicated than just a basic interest formula.