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Interest rate on Credit Card

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  • 01-05-2012 5:49pm
    #1
    Little Sunshine
    Registered Users Posts: 112 ✭✭


    I am trying to figure out the interest rate on my credit card as I am making a large purchase on it in the next few days and it will be maxed out. Obviously it will take me a few months to clear it so I want to have an idea of the interest on it per month. I have a BOI Classic Card (€3,000 limit) and called in to the local branch today and asked them what the interest rate was. They told me it was 14.44%. So if my card its maxed out @ €3,000 they told me the interest would be €208 per month. Now I have looked back over my statements since Jan 2012 and looked at the interest charged at its no where near 14.44%. I have attached details of my transactions. If anyone could shed some light on this for me it would be great.


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    #2
    Bank of Ireland: Pat
    Closed Accounts Posts: 354 ✭✭Bank of Ireland: Pat


    Hi Little Sunshine,

    Thanks for getting in touch. The interest charges on your card are automatically calculated on a daily basis starting on the day that each transaction is done and applied monthly when your statement is issued. This also takes the type of transaction (purchases, cash withdrawals, etc) and any payments you make to pay off the balance into account. This makes it quite difficult to make an accurate prediction of the interest that will be charged. It is possible to make rough estimate. I'll give you an example.

    Firstly, the 14.44% you mentioned is an annual percentage rate (APR). So to get a rough idea of the interest for any given month you would first have to divide it by 12 to get the monthly rate. 14.44% divided by 12 works out at 1.2%.

    Using your January balance as an example, you had a balance of 93.45. That multiplied by 1.2% comes to €1.12. As you've shown in your spreadsheet above, your actual interest was slightly lower at €1.10.

    There is another option that might be of interest to you. On the BoI Classic Card you have the option of adding larger purchases to a payment plan. If you have a purchase on your account that is more than €500 and less than 80% of your total balance it can be added to the payment plan. This would allow you to pay back the amount over 12 equal payments at a lower interest rate of 6.9% APR. For more info on this feature of your card you can call customer service on 1890 251 251 and they can go through the details with you.

    I hope this helps. If there is anything else I can do for you just ask.
    Pat


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