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How is credit card interest (APR) applied?

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  • 24-06-2011 2:27pm
    #1
    dnme
    Registered Users Posts: 3,411 ✭✭✭


    Folks

    As the title says, How is credit card interest (APR) applied?
    If you pay your credit card on time all the time, do you pay any interest at all? If a cc has an APR of say 20%, how and when is this applied?

    Many than


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    #2
    RangeR
    Registered Users Posts: 7,265 ✭✭✭RangeR


    Interest is only applied if you do not clear to a 0 balance come end of period [month]. If you pay off the entire card before bill time, you pay no interest.


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    #3
    dnme
    Registered Users Posts: 3,411 ✭✭✭dnme


    RangeR wrote: »
    Interest is only applied if you do not clear to a 0 balance come end of period [month]. If you pay off the entire card before bill time, you pay no interest.

    If this is the case, are you effectively getting 1 month credit totally free? I'm sure they apply admin charges at year end or such?


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    #4
    the groutch
    Closed Accounts Posts: 16,096 ✭✭✭✭the groutch


    dnme wrote: »
    If this is the case, are you effectively getting 1 month credit totally free? I'm sure they apply admin charges at year end or such?

    only government duty on the card itself, which is €30


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    #5
    RangeR
    Registered Users Posts: 7,265 ✭✭✭RangeR


    dnme wrote: »
    If this is the case, are you effectively getting 1 month credit totally free? I'm sure they apply admin charges at year end or such?

    Technically, you asked two questions but maybe you were unaware. You asked how interest [APR] is charged.

    APR is a culmination of all charges, not just interest. If you clear your card you will not incur interest. I already said this. However you MAY incur admin charges but you absolutely WILL incur government levy once a year [April?]. This you cannot get around.


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    #6
    R P McMurphy
    Closed Accounts Posts: 2,129 ✭✭✭R P McMurphy


    dnme wrote: »
    If this is the case, are you effectively getting 1 month credit totally free? I'm sure they apply admin charges at year end or such?

    It is in essence getting a month's credit free IF you clear it at the end of each month. If you run up a large bill, which is easy on a business account, and then are not in a position to clear it you find it impossible to clear and have then turned into a nice cash cow


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    #7
    dnme
    Registered Users Posts: 3,411 ✭✭✭dnme


    In my case, the cc is paid by direct debit to the issuing bank so I have never paid late. Used this way, that's a pretty good deal.

    Going on the above, what I find interesting is the way these guys advertise credit cards. The ad's are always based on APR rates or at least APR/Interest always features in the ad. But it seems APR/Interest on a credit card account only applies in a negative scenario, i.e.late payment. So the ad's are based on what happens when the consumer defaults. Strange world.


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    #8
    dudara
    Registered Users Posts: 33,518 ✭✭✭✭dudara


    Moved to Banking & Insurance & Pensions

    dudara


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