Math Geek Question
by I've had a credit card for about 5 years, during which time the interest rate has slowly climbed from 9% to about 23.99%, where it is today. I didn't have a high balance on it until I had to move out of my parents house, when I had to put all my house costs on it. I've been paying it down since Don and I melded our incomes, so that the balance as of today is $1,210.51 (obviously, I charged other things on it). Since the percentage rate was just raised and is so astronomical, I'm trying to decide if it's worthwhile to transfer the balance to another card.
Another card has a balance transfer rate of 4.9% with a transfer fee of $60 and a 14 day period to complete the transfer. I'm trying to figure out what interest I would pay over the next 4 months if I make $300 payments.
Past statements show:
(statement date / previous balance / payments / purchases / balance subject to finance charge / finance charge)
4/7/05 / $1,634.46 / $200 / 205.80 / $1,599.67 / $31.91
5/6/05 / $1,672 / $150 / $0 / $1,635.45 / $30.52
6/7/05 / $1,552.69 / $100 / $0 / $1,515.04 / $31.53
7/7/05 / $1,484.22 / $300 / $0 / $1,347.61 / $26.29
I want to know:
1. How does the credit card company calculate the "balance subject to finance charge"?
2. How is the finance charge calculated relative to the interest rate?
3. How much interest would I pay over the next 4 months?
This is a really long word problem that I've been thinking about for like 45 minutes. I even read a howstuffworks.com article about finance charges, but it didn't give me a formula for calculation.
AI Summary
12 Comments
This is an old post; I paid off the cards.
well, that was fast!
Don got a bonus that we weren't expecting, so that did it. :)
haha, awesome :)
http://www.creditreliefsoft.com/products/creditcalc/demo/
"The Credit Card Calculator calculates what to pay on your bills with a special formula that prioratizes them by interest rate and amount, the suggested amount will help you pay off the bill; not just give the credit card companies their interest each month. The Credit Card Calculator also can handle regular bills."
you can always call you're credit company and see what percentage rate they have at that moment and adjsut back to a lower percentage. Just because your percentage is up to say 25% from 9% doesn't mean you have to keep the 25%. you just need to call them and do a little haggling and they will lower it.
this reminds me of the time when i madea program to find out if it was more advantageous to pay off the highest APR card first, or to pay off the card with the most interest for that month (large balance VS high APR)
There are tons of credit cards that will do free balance transfers, and like 0% interest on the amount for 6 months to a year.
Also, TODAY call that credit card and request that they lower your interest rate. I have never had any of my cards increase the rate on me. That's terrible! If they keep raising it, drop that card IMMEDIATELY, especially if you call and they won't lower it.
The card that I would transfer the balance to advertised a 0% rate for 6 months, but that 4.9% and $60 was in the fine print.
When I got the notices raising the interest rate, they were worded that if you didn't accept the raised rate, you had to pay off the card, and at the time, I didn't have any other cards to transfer the balance to and I didn't have the moolah to pay it off.
closing cards can actually hurt your credit report
and yeah i read something recently about how CC companies have been raising their APRs and can do this without your acknowledgement, how nice