I'm pretty new to the whole credit card thing. I currently have a WaMu credit card that is interest free until January 2008. In January, the APR will be Prime Rate + 23.74% . My balance as of right now is $1269.69, but should be around $1000.00 by January. What I want to know is how much interest will I most likely pay during January & February. I'm using our tax refund to pay the balance off in whole - not the best for credit, I know. Thanks!
2007-12-05 12:46:01 · 4 answers · asked by Anonymous in Business & Finance ➔ Credit
Yikes. Hope you pay that off fast! Let's say prime doesn't exist.
$1,000 x .2374 = 237.40 (annual interest charge)
237.40 / 12 = $19.78 per month that you don't have it paid off.
Now say Prime is 9.99%
$1,000 x .2374+.0999 = $337.30 annually
$337.30 / 12 = $28.11 per month
This is only on a thousand bucks. So yes, it doubles if your balance was $2,000...this is how people get carried away on credit cards. Good luck!
2007-12-05 12:53:04 · answer #1 · answered by Anonymous · 1⤊ 0⤋
If the balance is not paid off in full you may have to pay interest on the entire balance that you have for the entire time you've had the card. You should call your bank to find out if this is the case.
A 23% rate + Prime?! That's crazy. You need to pay that card off and never use it again. There are better rates out there. That's absolutely nuts!!! That's worse than the cash advance rate on any of the cards I carry. You gotta read the fine print and do some math from now on. Check out this online calculator:
http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp
Save your money and pay cash for the things that you want and you'll be a lot better off.
2007-12-05 21:00:29 · answer #2 · answered by Tracker 6 · 1⤊ 0⤋
We don't know what prime will be in January but with that plus 23.74%, that's gonna be a really high interest rate. Pay that off as quickly as you can. You definitely don't want to carry a balance on that card.
Once you get it paid off, only charge what you can pay in full every month. You can build up a good payment history and find a better interest rate card. Maybe something with rewards.
2007-12-05 21:01:03 · answer #3 · answered by bdancer222 7 · 3⤊ 0⤋
First responder missed something -- the rate is 23.75% + prime -- now around 5%. So, it will cost about 30% annually (2.5% per month) to carry the balance. Which, in your case, is $25. Now you know why banks make money. In future, plan to pay your balance in full each month.
2007-12-05 20:57:16 · answer #4 · answered by Anonymous · 1⤊ 0⤋