Can someone help me work out my APR please...

ti1980

I have a Barclaycard with different APR's on it and I was wondering what the average APR on it is.

Previously my APR was at 18.9%. After doing some card shuffling, I now have about £550 on 18.9% APR and about £1700 on 5.9% APR.

I am so bad at maths that I don't have a clue how work out the average. What I intend to do with the card is to BT the whole balance when I have room on other cards and then BT the whole balance to Barclaycard so I will have the whole lot on a 6.9% rate instead.

Any help on doing the maths gratefully received as always. TIA. :beer:

Maddie

Using the amounts given, you're average APR is;

18.9 * 550/(550+1700) + 5.9 * 1700/(550+1700) = 9.07777...

So 9.08%

ti1980

Didn't realise it would still be that high. Gonna have to do a bit more shuffling around I think to get that down. Thanks for the maths help, much appreciated.

dag_2

Using the amounts given, you're average APR is;

18.9 * 550/(550+1700) + 5.9 * 1700/(550+1700) = 9.07777...

So 9.08%

Bear in mind that that's only an instant APR, assuming you pay off the entire debt right now. However, credit cards will apply payments to mixed-interest-rate balances towards the cheapest debt first. Therefore, your actual APR will depend on how long you take to pay the debt off. The longer you leave it, the higher your APR will be - but it won't be less than 9.08%.

I've just had a bit of a play with a spreadsheet to find out what your APR would be over the whole term, if you only made the minimum payment until the balance was cleared.

I've made a few assumptions. I assume that payments are first applied to the 5.9% APR balance, and then to the 18.9% balance, and that these interest rates don't change until you've cleared the balance. I've also assumed that if your balance is more than £5, then your minimum payment is the greater of 2% of your balance or £5, and that if your balance is less than £5 then it's your whole balance.

If these assumptions are correct, then it will take you 466 months to clear the balance. Your total repayment would be £7269.04, and the APR over the whole term from now until final repayment would be 18.1%

Yep - 18.1% APR - that's only 0.8% lower than the standard 18.9%. That's why Martin's always telling us to clear high-rate balances off cards before taking up their low rate promotions. It's also why you should never use low-rate balance transfer cards for purchases, and low-rate purchases cards for balance transfers. Discount interest promotions make very little difference to your overall interest rate, unless you only use the card for that promotion, and nothing else.

More figures: in your case, the part of the balance that's charged at 5.9% APR would be cleared after 13 months - and by this time, the compounding of interest on the part of the balance which is charged at 18.9% APR would have caused it to grow to £2021.30



(edited because figures were wrong due to a typo in spreadsheet - I think I've got it right this time)

ti1980

Wow! Thats really insightful. Thank you so much for all of that. I'm going to BT as soon as I can so I get the whole £2300-ish onto a 6.9% rate. I should be able to do that in August, then it will be much quicker for me to clear that card totally and the interest paid will be nowhere near as much as the scary figures that have been quoted.

At the time I just didn't have that spare £550 to clear the card and figured it would be better to do the BT then than to leave the whole balance on an 18.9% rate.

One problem is that it says the 6.9% is ending on the 31st July but I think they may keep it but they could raise it further as I did my initial BT when the rate was 5.9% before they raised it.