# How can I figure out this number

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
4 posts
Fanny

Posts: 2
Joined: Fri Apr 19, 2013 1:26 am

### How can I figure out this number

Hi,

I just got a credit card and I read the details in the price list.

APR: 16.9%
Fixed face monthly rate: 1.4%
Fixed face yearly rate: 16.86%
Fixed debt rate 18.21%
52 days interest free

There is a statement in the pricelist as : if you use your credit on 10000\$ every month in 12 month, then the total cost is 1583 \$, thus you have to payback 11583\$.

I ever did the simple calculation for the statement: why isn't it as 10000*1.4%*12=1680 ? is there any trick or something?

Thanks a lot if someone can help!

Gold Member

Posts: 28
Joined: Tue Mar 26, 2013 9:36 pm
Location: New York
I'm stumped. I can't get the numbers to work with the information provided. Canadians don't have a different way of doing math, so I guess I'm losing my touch.

If someone is using \$10,000 of credit each month, he or she would only be paying interest if (i) there wasn't a grace period or (ii) the bill wasn't being paid in full. Since your post mentions 52 days interest free, then there's a grace period.

At 16.9% APR, in order to pay \$1,583 in interest, monthly payments of \$566 (with a final payment of \$263), or some similar variation, would have to be made, but it would take 21 months. In order to pay a \$10,000 balance off in 12 months, payments of \$911.57 would have to be made, but the total interest paid would only be \$938.88.

The reason why it's not "10000*1.4%*12=1680" is because you have to take into account monthly payments (at least for the minimum amount) being made (i.e., the first month the balance is \$10,000, but after a payment is posted, the second month the balance will be less). In other words, 10000*1.4% (or \$10,000*((16.9/12)/100)) would be fine for the first month. The second month, it would be (10000-first month's payment minus interest)*1.4%.

An amortization schedule could look something like this:

Beginning balance: \$10,000.00

Month--Payment--Interest--Principal--Balance
1--\$566.00--\$138.90--\$427.10--\$9,572.90
2--\$566.00--\$137.40--\$428.60--\$9,144.30
3--\$566.00--\$127.02--\$438.98--\$8,705.32
4--\$566.00--\$124.95--\$441.05--\$8,264.27
5--\$566.00--\$118.62--\$447.38--\$7,816.89
6--\$566.00--\$108.58--\$457.42--\$7,359.47
7--\$566.00--\$105.63--\$460.37--\$6,899.10
8--\$566.00--\$95.83--\$470.17--\$6,428.93
9--\$566.00--\$92.28--\$473.72--\$5,955.21
10--\$566.00--\$85.48--\$480.52--\$5,474.69
11--\$566.00--\$70.98--\$495.02--\$4,979.67
12--\$566.00--\$71.48--\$494.52--\$4,485.15
13--\$566.00--\$62.30--\$503.70--\$3,981.45
14--\$566.00--\$57.15--\$508.85--\$3,472.60
15--\$566.00--\$48.24--\$517.76--\$2,954.84
16--\$566.00--\$42.41--\$523.59--\$2,431.25
17--\$566.00--\$34.90--\$531.10--\$1,900.15
18--\$566.00--\$26.39--\$539.61--\$1,360.54
19--\$566.00--\$19.53--\$546.47--\$814.07
20--\$566.00--\$11.31--\$554.69--\$259.38
21--\$263.10--\$3.72--\$259.38--\$0.00

Total interest paid: 1,583.10

If anyone else has any ideas, definitely chime in!
Bank of America: BankAmericard Cash Rewards (\$10k); Accelerated Cash Rewards (\$12k)
Chase: Freedom (\$2.6k); Amazon.com Rewards (\$5k)
American Express: Blue Card Everyday (\$14k)
Citibank: Forward (\$7k); ThankYou (\$10.5k)
Discover: More (\$14.5k)
Barclaycard US: Barclaycard Ring (\$9.4k)
GECRB: Banana Republic (\$4.5k); Amazon.com Store Card (\$10k)
Comenity: J. Crew (\$3.6k)

DoingHomework
Centurion Member

Posts: 707
Joined: Tue Sep 22, 2009 1:15 pm
Location: Arizona
The wording does not make sense. Did you perhaps translate that from French? Because perhaps the translation is not technically correct.

"Fixed face monthly rate" is not something I have ever heard of in any country. In English there are several terms that might be used but I have never heard of that one.

Fanny

Posts: 2
Joined: Fri Apr 19, 2013 1:26 am