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Some help understanding my new credit card.

  • 16-04-2011 02:11PM
    #1
    [Deleted User]
    Posts: 5,172 ✭✭✭


    I just got it today and saw that the APR is 32.1% (variable), this seems insanely high?

    Then the annual interest rates are 16.79% (variable) per annum for purchases and 19.68% (variable) per annum for cash.

    Introductory rate is 3.83% (variable) for first 12 months, after which the above interest rates take over.

    Can someone give me some explanation on these? Especially the high looking 32.1% rate.

    Thanks guys.


Comments

  • #2
    okiss
    Registered Users, Registered Users 2 Posts: 701 ✭✭✭okiss


    When you use your card to purchase something and pay it off in full by the payment due date you should pay no interest. If you use the card to withdraw cash you will pay interest on it immediately.
    If you are carrying a balance on your credit card for the first year you will be paying the introductory rate of 3.83% for the first 12 months but after this the rate of 32.1% seems crazy.
    Do you need the credit card? I now use a visa debit card linked to my current account. It works on the internet and will work abroad.
    At the moment both Ulster Bank and Per Tsb are doing these.


  • #3
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    The 32.1% is probably nothing to worry about. Courtesy of ECCD, Credit Card APR's are all over the place (because of stamp duty). If you put up a link to the card, might be able to confirm.

    As okiss said, the 16.79 is on purchases (high) and 19.68 on cash (average) - but you should never use a credit card to withdraw cash unless a real emergency.

    As with all credit cards, you should pay off the balance in full every month (and thus pay no interest). The only times you should ever allow yourself to not pay the balance in full is one-off cashflow issues. If you ever find yourself going a few months without clearing the balance in full, it's time to realise youa credit card is not for you and get rid of it before you do yourself real damage.


  • #4
    [Deleted User]
    Posts: 5,172 ✭✭✭ [Deleted User]


    I'll only need the credit card for when I go to the USA, which is the only reason I got it. Just for purchases. I plan to top up the account with a few k's so there is no balance to pay when I get back, or at least very little.

    I just don't know what this 32.1% apr refers to exactly, in what possible way could it affect me?


  • #5
    pjmn
    Registered Users, Registered Users 2 Posts: 1,133 ✭✭✭pjmn


    Sacramento - same advice I'd give to anyone with a credit card - don't use it as a borrowing facility - clear outstanding balance ecah month - interest rate then becomes irrelevant as you won't pay any interest...


  • #6
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    Sacramento wrote: »
    I'll only need the credit card for when I go to the USA, which is the only reason I got it. Just for purchases. I plan to top up the account with a few k's so there is no balance to pay when I get back, or at least very little.

    I just don't know what this 32.1% apr refers to exactly, in what possible way could it affect me?
    As I said, credit card APR's have been messed up by ECCD (European Consumer Credit Directive) which came in 10 months ago. As the APR must now include the government stamp duty, the APR becomes totally different to the actual rate of interest you pay and is basically a BS, irrelevant figure, but the one that banks must display.

    If you take a look here, you can see the cheapest cards on the market at the moment. From this, the Clear is the cheapest, with the Click a close second. However, when you look at the details of each card, the Click has the lower interest rates and charges (9.11% Purchases and 19.68% Cash compared to 10.43% Purchases and 21.36% Cash). The specific calculation of APR's is pretty much a mystery, and when it comes to credit cards post ECCD - completely misleading. Ignore the APR when it comes to credit cards and look at the various interest rate and charges.


    With regards front loading the card, you would need to be careful as, should you lose it, or be victim of fraud etc, your bank will not reimburse any money you have in credit. Safest bet is to keep the few thousand in your current account and transfer it via online banking to your credit card as and when you need it.


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