topic Re: Quick interest question!!! in Credit Cards

Quick interest question!!!

Anonymous — Sun, 10 Apr 2011 05:17:26 GMT

Ok have a first premier card (I know really bad with fees but it's building my credit for now) have a secured card with cap1 also btw. So anyways it has a interest rate of 59.9%.. Is that monthly or annually? So if my balance is $100 owed and I pay $50 I would owe $109.90 next month (59.09 in interest)? Very confused? Any help?

Re: Quick interest question!!!

Anonymous — Sun, 10 Apr 2011 06:37:40 GMT

WHAT?!

Is that even LEGAL???

APR is always annual...hence the A but seriously, are you sure? 59.9%??????

Re: Quick interest question!!!

trumpet-205 — Sun, 10 Apr 2011 06:53:45 GMT

APR is annual, however, interest is calculated on daily basis. So you should look for daily interest rate in your disclosure. Also take into account of minimum interest charge.

Highly suggest you stop using your First Premier card and transfer those balance on to Capital One.

Re: Quick interest question!!!

Anonymous — Sun, 10 Apr 2011 06:59:14 GMT

Your 59.9% is the annual percentage rate (APR)

It was common, though I don't know if the CARD act changed it, for companies to maximize the APR with rounding.

59.944444% can be advertised as 59.9%

To figure out interest charged monthly you have to convert to APY.

If they are compounding monthly 59.944% APR would be 79.49% APY or 6.624% monthly.

If they are compounding daily 59.944% APR would be 82.02% APY or .2247% daily, with the daily interest added to the balance.

There are also several different ways to calculate the finance charge. Avg Daily Balance, Ending Balance, Previous Balance.

For simplicity I'll use ending balance, but most common is average daily balance.

So, to answer your question... Assuming monthly compounding, and ending balance method.

If you had a $100 balance and payed $50 your finance charge would be 50 * .06624 (6.624%) = $3.31

And you would owe them 53.31

But again, they're probably using average daily balance and compounding daily.

Re: Quick interest question!!!

creditguy-378 — Sun, 10 Apr 2011 12:43:37 GMT

it's yearly and you have to also add in the monthly fees and AF If you are going to keep the FP card i would just buy like a lunch like one time a month on it and PIF that way it doesn't matter if the iterest rate is 500%( like some payday loans are) remember 59.9% of 0 is still 0

Re: Quick interest question!!!

MarineVietVet — Sun, 10 Apr 2011 15:36:01 GMT

The only way you'll know for sure how FP calculates interest is to read the information provided on your monthly statement. It can get somewhat complicated to figure out (at least for my non-math leaning brain) but you can run the numbers yourself.

All of my cards accrue interest daily but FP might be different.

But I will agree that the best tactic is to always pay balances in full before the due date to avoid any interest.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: Quick interest question!!!

DI — Sun, 10 Apr 2011 15:44:45 GMT

@Anonymous wrote:
Ok have a first premier card (I know really bad with fees but it's building my credit for now) have a secured card with cap1 also btw. So anyways it has a interest rate of 59.9%.. Is that monthly or annually? So if my balance is $100 owed and I pay $50 I would owe $109.90 next month (59.09 in interest)? Very confused? Any help?

My goodness gracious as some may say!! With an APR that high, I see why the poor stay poor.

Re: Quick interest question!!!

Anonymous — Sun, 10 Apr 2011 22:26:52 GMT

thanks everyone for your answers. I understand it a little better now lol but one more thing, if its only $4 a month in intrest why is it a big deal? maybe for higher limit card I supose?

Re: Quick interest question!!!

Anonymous — Sun, 10 Apr 2011 23:14:10 GMT

Your making them money already through transaction fees and then on top of that they charge you a monthly fee and interest fees that are that high. My best interest rate is 9.99 fixed on a credit card. Normal is anywhere from 15-30Ish. Thats definitely an outlier. If all thats not a big deal to you then go ahead and stay with FP and enjoy.

Re: Quick interest question!!!

Walt_K — Mon, 11 Apr 2011 00:45:10 GMT

@Anonymous wrote:
thanks everyone for your answers. I understand it a little better now lol but one more thing, if its only $4 a month in intrest why is it a big deal? maybe for higher limit card I supose?

One way I started looking at this to get my spending in check is that I will spend significant time when I am purchasing something shopping around making sure I am getting the best deal. But then I was buying things on my credit cards and carrying balances. What's the point of making sure I save a couple bucks buying it on Amazon if I'm going to carry balances all the time and fork out interest payments every month.

Re: Quick interest question!!!

haulingthescoreup — Mon, 11 Apr 2011 01:12:29 GMT

@Walt_K wrote:
@Anonymous wrote:
thanks everyone for your answers. I understand it a little better now lol but one more thing, if its only $4 a month in intrest why is it a big deal? maybe for higher limit card I supose?
One way I started looking at this to get my spending in check is that I will spend significant time when I am purchasing something shopping around making sure I am getting the best deal. But then I was buying things on my credit cards and carrying balances. What's the point of making sure I save a couple bucks buying it on Amazon if I'm going to carry balances all the time and fork out interest payments every month.

A great way of looking at it! Good post.

Re: Quick interest question!!!

Anonymous — Mon, 11 Apr 2011 01:31:39 GMT

Don't mean to go off topic but, seriously, is a 59%APR legal????? Is there no law capping interest rates on credit cards? In my book, this kind of APR is beyond predatory!

Re: Quick interest question!!!

trumpet-205 — Mon, 11 Apr 2011 01:59:03 GMT

@Anonymous wrote:
Don't mean to go off topic but, seriously, is a 59%APR legal????? Is there no law capping interest rates on credit cards? In my book, this kind of APR is beyond predatory!

There is even a 79.9% APR offered by First Premier at one point.

http://www.americanbankingnews.com/2009/10/15/first-premier-bankcard-offers-customer-79-9-apr-credit-card/

In Brazil, its credit card can have APR as high as 240%.

And yes, they are legal (despite it being a loan shark).

Re: Quick interest question!!!

Anonymous — Mon, 11 Apr 2011 14:39:47 GMT

Payday loans are legal in most states with APRs above 300%.

So, 59% APR is a pretty sweet deal! (sarcasm) lol

Re: Quick interest question!!!

Anonymous — Mon, 11 Apr 2011 14:55:23 GMT

@Anonymous wrote:
Ok have a first premier card (I know really bad with fees but it's building my credit for now) have a secured card with cap1 also btw. So anyways it has a interest rate of 59.9%.. Is that monthly or annually? So if my balance is $100 owed and I pay $50 I would owe $109.90 next month (59.09 in interest)? Very confused? Any help?

Hi OP,

Glad you're posting on this - it's a good thing to wrap your arms around, and many rebuilders (unfortunately IMO ) look at FP as one of their options.

In your case, keeping your FP open really isn't doing you any favors in the rebuilding department.

Your secured CapOne is doing you just fine.

So, the interest and annual fee/monthly fees are just money out the window.

If you opened your FP as a builder card, you've already built beyond it when you opened your secured CapOne.

I assume your FP is a short-term card in your mind - in other words you're not planning on keeping it open for a decade or two. If that's the case, you may as well close it now as later. Save some cash. Don't fret about making sure you pay before their outrageous fees are added. It will still report and impact your AAofA for about ten years after it's closed.