Question by Jade: How does, ' 16.9% pa variable for purchases' work? I have an egg credit card, i was under the impression that the interest rate was just on what was bought after the 0% ran out. My sister said it's on the whole balance. Does anyone know? Do I have a bad rate? Can anyone recommend a good card to transfer the balance to? Or a good 0% card? Best answer for How does, ' 16.9% pa variable for purchases' work?:
Answer by Mike
16.9% variable PA (per annum-or yearly)means that if you kept the same balance for one year, your balance would increase by 16.9 % above what it was at the beginning. Example--you start with $ 100 balance, assuming no purchase activity no payments, and no rate changes, after one year you would owe $ 116.90. VARIABLE means that the rate can be adjusted up or down at any time by the bank. If you pay the balance IN FULL every month by the due date, there is ZERO finance charge, If you only pay minimum due or any amount less than the full balance, the ENTIRE OUTSTANDING BALANCE is subject to the finance charge rate retroactive to the date the purchase was posted to your account, and you will continue to pay some finance charges until you bring the balance down to zero again.
Answer by TaxGurl
16.9 is the annual interest rate. Many credit card companies actually calculate your interest on a daily basis to squeeze the most out of you. (Example: You have a $ 1000 balance. The 16.9% is divided by 365 to reach a daily percentage rate. ***I'm completely making up the numbers for example*** Pretend that breaks down to .004% daily. They multiply your $ 1000 balance by .004% which gives them $ 4 in interest. They add that to your balance. The next day, they multiply your new balance of $ 1004 by .004% which gives them $ 4.016 in interest to add to your balance......and so on.) They charge you finance charges on the finance charges! Back to your question: generally when you have a teaser rate like 0% for a certain time, any balance on the card will then be changed to the new rate when the time on the low rate expires. A few cards will offer 0% or a low rate for the life of the balance transfer. But here's how they get you with that: You open a card with a $ 10,000 limit and transfer $ 5000 to it at 0% until the $ 5000 is paid off. Regular purchases on that card are at a normal interest rate. If you start making purchases on that card, you will see two categories of balances on your statement: new purchases and the transfer. The credit card company will apply your payment to the balance with the lowest interest rate. So, if you charge $ 1000 on the card doing your holiday shopping, that $ 1000 will stay on the card, compounding interest until you have paid the entire $ 5000 you transferred at the lower rate. I haven't seen the interest applied retroactively to the entire purchase EXCEPT for store credit cards. Like those furniture stores that offer 0% for 12 months.....if you haven't paid the entire balance within the 12 months, they will charge you the entire amount of interest that accrued over the year. A Visa or MC won't do that. 16.9% is a little high but I've seen worse. There really isn't a 0% card unless you pay your balance every month. The companies are in it to make money so they may offer 0% as a promotion for a time but it is never forever. :-( And they will look for excuses to make you lose the promotional rate----like a late payment. As soon as I made a 0% balance transfer to one card, they shifted my due date up 9 days from when it has traditionally been due for the last two years. This would have tripped up anyone on an automatic bill pay system. You can shift balances around to new cards to take advantage of 0% rates. However, opening a lot of cards is bad for your credit report so be careful when you do this. Doing it once or twice to help you get things paid off is ok----doing it constantly because you are charging more than you can afford will sink your credit rating and make it harder to get good rates in the future.
The Egg credit card offers 0% interest for up to 14 Months onbalances transferred within the first three months (3% fee applies). 0% interest on new purchases for up to 3 months.
creditcardsbusiness-tips.blogspot.com Egg credit card UK
A: To start with, it's a great move to take advantage of a 0% credit card rather than to continue to pay 12%. At her current rate, simple interest on $ 6000 is $ 720. While the actual interest paid will go down as the balance declines, transferring the ... Reader Mailbag: How to Compare Balance Transfer Offers
Whenever I hear the number 0%, I hope that it refers to the interest rate I have to pay and not the interest rate that I have to earn. There are many different credit card offers out there, and of course when you see the 0% it seems like it would be the best option. But, when you sit and think about it you might wonder why one credit card would be 0% and the other would be 26%, what's the catch?
It is not that the issuer is out to scam you. But you still need to look close...
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Whenever I hear the number 0%, I hope that it refers to the interest rate I have to pay and not the interest rate that I have to earn. There are many different credit card offers out there, and of course when you see the 0% it seems like it would be the best option. But, when you sit and think about it you might wonder why one credit card would be 0% and the other would be 26%, what's the catch?
It is not that the issuer is out to scam you. But you still need to look close. You never know what you are in for unless you read all the terms and conditions associated with the card.
0% Doesn't Mean 0% Across the Board
While there are some legit 0% credit cards out there you need to look at the fine print before you simply assume that you can buy everything with no interest. The 0% is not a blank check that you cash anywhere. If applies to some types of transactions. This isn't to say that you shouldn't take advantage; you just need to be an aware consumer and make sure that you know how the 0% works.
If you have some credit card balances that you would like to transfer than you may want to look for a 0% credit card. There are many credit cards out there that offer 0% balance transfers. The more the transfer, the higher the saving. Many people use these cards to do away with those high interest credit cards so that they can actually start making a dent in the amount of money that they owe instead of just paying off the interest each month.
Many 0% credit cards have 0% interest rate offers on specified purchases. These may be purchases at specific stores or for specific products, but depending on what you purchase these credit card offers really can save you a lot of money. You'll need to be sure to read all of the fine print on these cards to be sure that it is something that will save you as much money as you would hope.
Then there are the cards that use 0% as the way to ensnare you. Often times this 0% is good for the first six months or a year that you have a card. This is a nice way to consolidate debt, make big purchases, pay for car or house repairs, or just buy things that you have been putting off because you didn't want to pay interest. One more interesting dimension of credit cards relates to rewards and cash back.
Before you choose any one of the 0% credit cards that you come across you should read through all of the features. The prudent buyer wants to know the interest rate, not just on day one but also on later days. Do you need to pay off all of the items that you bought during the 0% time? Whether you make money or lose money will depend on how smartly you use the card.
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