When does the interest get added after an interest free period on a credit card

(6 Posts)
KarlKennedysDurianFruit Fri 11-Sep-20 12:07:24

My SIL isn't great with money, her and DB earn more than DH and I but also spend more.

About a week ago she said something about her credit card interest kicking in soon, it transpires she has a current 0% deal which expires tomorrow and has about £6000 on it, she has no savings to pay it off, DBs savings are mainly tied into a private pension as he's self employed and the rest went on getting them through Covid as he earns too much for them to have been eligible for any of the financial support, they have also just been on holiday and have booked to go again.
I spoke to her about a balance transfer (she had no idea what this was) and helped her to apply for a new card with 0% on balance transfers and zero fee for this. She got accepted but didn't receive the paperwork until yesterday, which she's signed and put back in the post today, the transfer won't be processed until she receives her card and activates or, likely to be around a week.

Does anyone know how much interest she'll have to pay for that week? Her interest rate is 16.9% on the old card.
I'm not justifying any of the above as I said they don't manage their finances well and have no reason not to, earning around 100k between them.

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PerfectlyImperfectx Fri 11-Sep-20 12:50:55

Hi, I think it would be roughly £69 for a week. Possibly slightly less if the month has five weeks.

Calculation I used is APR (16.9%) / 365 (days) = 0.046

£6,000 x 0.046 = £276 / 4 or 5 depending on how many weeks in a month = £69 (based on 4 weeks)

Please don’t take this as correct. I used to work in a bank but it’s been a long time since I’ve calculated interest. Hopefully someone more knowledgable will be along soon!

KarlKennedysDurianFruit Fri 11-Sep-20 13:01:18

Thanks that's helpful, she's currently moaning saying there was no point 'faffing around' and applying for a new card as she'll have to pay a full month's interest anyway, I didn't think she would but didn't know how to calculate it.

I think she was hinting for me to lend her the money and she pays us back (zero interest of course), but she's not having our rainy day fund and the other pot is for our much needed new bathroom. I'd be more willing if it hadn't gone on things like eyebrow microblading, Yeezy trainers and £75 bikinis......

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RedCatBlueCat Fri 11-Sep-20 13:15:40

Hmm, not sure about the above calculation.
Calculating the interest per day, then dividing further into weeks seems strange to me.

I think it would be
£6000×0.046% = £2.76 interest per day.
So, if it was 4 weeks/28 days that would be £77.28

But Ive never worked in a bank, so am probably less likely to be right than the PP.
I just cant understand tye further division once daily interest has been calculated.

PerfectlyImperfectx Fri 11-Sep-20 13:24:00

@RedCatBlueCat

You are perfectly correct. I’m supposed to be working and I’m in need of a strong coffee. Apologies OP, please ignore me! But I do understand why you’d be reluctant to lend her the money given the circumstances. As above the interest shouldn’t be a large amount and if she hadn’t transferred it to a 0% card she’d be continuing to pay it in any case.

KarlKennedysDurianFruit Fri 11-Sep-20 13:42:07

So if she transfers the balance within a week it'll be around £20. Thanks to both of you I've also learnt something about breaking down APR!

OP’s posts: |

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