Questions regarding credit card APR's and how to calculate.

[blurredvision]

Forgive me if this is a stupid question, but I breifly googled and couldn't find the relevant info I wanted. Let's say I get a credit card with a 9.99% APR, and I buy a $200 item. Assuming I do not pay that off in 25 days, is it as simple as the credit card company taking that $200, tacking on 9.99%, and now I would owe $219.98? And then if I only pay $50 by the next due date, which will give me a balance of $169.98, is my next payment $169.98 x 9.99%, which gives me a balance of $186.96?

I was really good in math back in high school, but I failed to ever learn how this stuff was figured up. I'm not sure if it's this simple, that's why I ask.

Thanks.

 

[kranky]

APR = ANNUAL percentage rate. Divide it by 12 to get the amount of interest charged each month. Other than that, you're in the ballpark.

 

[RossMAN]

Originally posted by: kranky
APR = ANNUAL percentage rate. Divide it by 12 to get the amount of interest charged each month. Other than that, you're in the ballpark.

and calculate it based on your ADB (average daily balance).

I've called my cc before asking "how do you calculate finance charges" and they walked me through it. I would recommend calling them with your statement in front of you or logged on to their online banking.

 

[spidey07]

Originally posted by: RossMAN

Originally posted by: kranky
APR = ANNUAL percentage rate. Divide it by 12 to get the amount of interest charged each month. Other than that, you're in the ballpark.

and calculate it based on your ADB (average daily balance).

I've called my cc before asking "how do you calculate finance charges" and they walked me through it. I would recommend calling them with your statement in front of you or logged on to their online banking.

Yep, always read the fine print. And then read it again.

 

[simms]

Divide the APR (9%) by 365 and that's how much more you pay everyday when you don't pay your bills. 9% is how much you pay on the balance per year.

 

[nife4]

here's how it goes:

divide your apr by 365... this is your daily periodic rate...

now if your card does like discovercard, then they take the balance you had the day before, add any debits for that day (purchases and what not), subtract any payments made that day, then times that by your DPR and add those two together... you do that everyday for your billing cycle... then add up the finance charges for everyday and that is the finance charges you will pay for that billing cycle... pretty complicated when they were teaching me for the job just off of reading stuff, but with excel, a simple formula made it all make sense...