03-06-2009 06:45 AM
My credit card breaks down my balance my rate summary: Balance Transfer; Purchases and Advances; then it charges an interest for each to calculate the total finance charges. They have a daily periodic rate, and a corresponding APR. How do they calculate the total interest?
03-06-2009 09:19 AM
Each total has its own APR and terms that compute interest.
ie: purchases vs cash advance.
each total has its own formula which is used each month when your statement updates.
The individual finance charges are then added to your account.
In most cases your credit card only touts the APR of purchases.
You may have a Purchase APR of 7.9% and a cash advance APR of 11.9.
For example The purchase APR gives you a 30 day grace, the cash advance starts to acrue immediately.
Depending on the mix of purchase to cash Advance you may have a real APR on the total balance of any number between the 7.9 and 13.42
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