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AIB Credit Card Interest Rates/Debt?

  • 27-12-2012 7:25pm
    Posts: 14,344 ✭✭✭✭

    Hi guys,

    Was wondering if anyone could give me a simple-English idea as to how interest is calculated on credit cards?

    As a bit of a back-story...

    Brother's Wife has one of those AIB 'be' credit cards (Visa). I been using it for the last couple of years as I'd do a lot of online shopping, etc. and so although it's her card, i'd be the one who uses it most.

    Have never really had much of an issue with 'losing the run of myself' but I did go overboard a while ago and spent a fair bit on some bits and pieces. Never stopped paying money off the card. However, although I never actually read up on it, I was under the impression that if I paid a certain minimum amount off each month, then the interest rate would be negligible.

    Unfortunately, I now seem to be in a position where I can't seem to get the debt down at all.

    As far as I've been lead to believe, the highest possible interest rate you can pay is 22.7% (according to HERE).

    So, on November 11th, I got my brother to check online how much was owed on the card. It was about €1,050 (can't remember the exact figure, but €1,050 would've been rounded up to the nearest €50).

    Since then, I've kept record of what I was spending and paying off. On December 1st I added 22% onto what I owed it at that point (but I think I was wrong here, I think I should've added 22% of my starting debt for that month?).

    So today, the 27/12/12, having been both regularly paying money off, but also using the credit card a bit, I reckoned I owed it approximately €430. I rang my brother, he checked the site and he said the amount owed was ~€950 (about €500 more than I had anticipated).

    So as you can imagine, I'm at a bit of a loss as to how they managed to pluck an extra €500 out of the air. In over a month, I've managed to pay off about €600, but i've only actually knocked off €100.

    Simple numbers and loosely calculating, €500 is 20% of €2,500. So that's the figure (roughly) that they're taking their interest from, as far as I can see (yet nothing to the value of €2,500 would've been bought).

    So I'm at a bit of a loss, and was wondering if anyone could explain to me how interest rates on credit cards actually work? I've obviously got a very poor understanding of it, and Googling around doesn't seem to be offering much help at all. I can't quite grasp how I've been trouble-free for years, but all of a sudden I'm up to my eyes in never-ending debt. :confused:

    Cheers to anyone able to offer any insight here. :)


  • Posts: 14,344 ✭✭✭✭ [Deleted User]

    Just to update on this,

    Turns out that my brother was reading the card wrongly. The reason my 'debt' was going up so much was because I was adding additional money to the card. Debt was cleared in November, but I kept paying it off, so instead of lowering my (non-existant) debt, I was just adding to the card's balance.

    Well.. That's a weight off my shoulders! Haha.

  • Registered Users Posts: 3,900 ✭✭✭Terrontress

    Using your brother's wife's credit card is a bad idea.

    Would you be covered if you buy something and the retailer goes bust?

    If you are using it and it becomes fraudulently intercepted is she covered?

    I know for a fact that if you did have problems paying it off, it would be her credit record affected.

    She has been assigned a limit based on her ability to pay it off, not yours :|