What actually happens with 4k on a credit card when interest is applied?

[User200001]

Somekne help me calculate this? I don’t really understand how it works.

4K on interest free but when that period ends, how willy repayments be calculated? Can someone give me an example with an average interest rate of a card out there at the moment?

You need to check the interest rate on your statement. If it's 20% then it will be 0.20*4000 divided by 12 (months), so about £67/month for 20% interest.

Can't you transfer it to an interest free offer at another bank or is your credit rating shot? See www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

Ok so if you have £4k on a card and are paying the minimum in interest only then that payment reduces the £4k eg

So debt = £4k
Payment of £100
Debt = £3,900

Your interest only deal will only still apply if you make payment on time

Once it ends

Debt £4k
Say Interest is £40
You make a Payment of £100
Your debt is now £3,940 (even though you paid £100)

Debt will only be reduced by £60 because you paid £100 but £40 of it was used to pay interest

But yes you do need to check what you'll be charged - if you ring they should tell you

Ok thanks this is helpful! It is on interest free now but I like to plan for the worst case scenario. At the moment I pay over the minimum and no interest is applied.

The first poster did the maths... so on that basis if I paid 67 pounds a month on top of say 100 then I would be keeping up with payments and reducing the balance?

For some reason in my head I was thinking I would have to pay back 200 quid a month in interest. Although 67 a month isn’t great either haha.

(And yes I know each card has different rates, just wanted an example)
Thank you

Have a look on the spreadsheets thread .... I'll bump it for you
pop your numbers in and all will become clear