PLEASE EXPLAIN HOW purchase APR and advance APR works???

[Anonymous]

 my credit card which has a $1000 limit with a 23.99 APR purchase rate and a 24.99 advance rate what is the difference between the 2?????

so if i have a $400 balance on my card would the interest be close to $100 since thats about 23% making my balance $500??

i have my card at about $700 used right now and got charged $13.55 in interest.....wouldnt 23% be charged from the balance i have remaining? im lost thank you in advance

[juggalo9er]

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@Anonymous wrote:

 my credit card which has a $1000 limit with a 23.99 APR purchase rate and a 24.99 advance rate what is the difference between the 2?????

so if i have a $400 balance on my card would the interest be close to $100 since thats about 23% making my balance $500??

i have my card at about $700 used right now and got charged $13.55 in interest.....wouldnt 23% be charged from the balance i have remaining? im lost thank you in advance

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the two are calculated completely seperately

if you take a cash advance (highly discourage) the interest rate will be the 24.99 plus fees, and there will be fees

the rest will be treated as you are used to with the 23.99

edit: interest is calculated daily with an annual interest rate

[Anonymous]

so where do they take the 23.99% from? becuase i owe 700 and got charged 14$ how did they get that? thats not 23.99% of 700 ??? i been searching and reading and just cannot understand

[juggalo9er]

http://www.bankrate.com/calculators/managing-debt/minimum-payment-calculator.aspx

[b_diddy]

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@Anonymous wrote:

so where do they take the 23.99% from? becuase i owe 700 and got charged 14$ how did they get that? thats not 23.99% of 700 ??? i been searching and reading and just cannot understand

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APR = annual percentage rate, not simple interest

If you divide 23.99% by 12, it comes to approximately 1.99% a month, or about $14.00

[Anonymous]

sorry for bein a noob lol but is there anyway you can explain anymore clearly ANYBODY??!!!!

[oscar_actuary]

The full 23% Interest is not charged each month.

That's the rate in terms of if you borrowed the money for a year.

It's this way with all normal loans or credit card

You ever buy a car with a loan? 

Here is an example with 6% APR, compounded Monthly. 

0.06/12 * 15,000 = 75.

0.06/12 * 13,784 = 69,  etc

We divide by 12 because we are applying 1/12th of the interest over 1/12 of the Year..a month.

For Credit Cards the interest is Daily so for 23% APR you take 0.23/360 * Average_Daily_Balance, to determine the interest for that day.  Then when you sum up the Daily Interest, you get the total interest for the month.  There are variations to this, but it gets the gist.  I'm probably repeating much above me, hopefully you can understand.  Banks often use 360 days per year assumptions.

Month	Loan Amount	Interest	Payment
1	15,000	75	(1,291)
2	13,784	69	(1,291)
3	12,562	63	(1,291)
4	11,334	57	(1,291)
5	10,099	50	(1,291)
6	8,859	44	(1,291)
7	7,612	38	(1,291)
8	6,359	32	(1,291)
9	5,100	26	(1,291)
10	3,835	19	(1,291)
11	2,563	13	(1,291)
12	1,285	6	(1,291)

[b_diddy]

Hopefully, I'm not being punk'd. :-)

1.  You said they charged you $14.00 on the $700 you owe

2.  You said your interest rate (APR) is 23.99%

3.  Take 23.99% and divide it by 12 months.  That comes to approximately 1.99% each month you are paying on the outstanding balance.

4.  1.99% of $700 is $14.00.  That's why they charged you $14.00

Hope this helps.  If not, someone else will need to chime in.  Good luck! :-)