How to Calculate Interest on Credit Cards? When Do You Pay Interest?
Posted on July 22, 2011 by R S in Credit Cards
Are you wondering how to calculate interest on credit cards in India? It will save you a lot of time and money if you know exactly how to go about it. Generally speaking, the credit card companies charge you an interest on the total amount that is unpaid on your card after a certain month. These charges are a very important part of your credit card service. You should always know the full details about them- including how they are applied.
It’s a very common practice in India to look at the other aspects of the card while making a decision. People tend to take closer looks at the annual and renewal fees, charges for add on cards etc. However, they tend to ignore the interest charges. These charges can give you nightmares if you don’t understand them well. So here’s a look at how they are
When Do You Pay Interest on Credit Cards?
You pay interest on your credit card based on the principle of average daily balance.
This is based on a monthly rate of interest (usually about 2.65%). The average daily balance is calculated in this simple manner:
Calculated interest= (total amount outstanding*2.65% per month*12 months)* number of days/365.
You will also need to calculate the grace period before you find out the interest payment. During this period, there are no interest charges on the balance amount. Of course, you will need to repay the whole amount together with the monthly bill. It is also called the interest free period and may vary between 20 and 60 days.
How to Calculate Interest on Credit Cards Excel Formula?
Now that you know how to calculate interest on credit cards, avoid these unnecessary payments. Pay fully and on time- you could be saving a lot of money!Source: www.moneyminto.com