How does, ' 16.9% pa variable for purchases' work?

Question

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?

Answer 1

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 2

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.

Answer 3

I too have the same question