# credit card rates



## bidderman1969 (Oct 20, 2006)

friend of mine has quite a bit on credit cards, and like me, can't get good rates on a loan, so we were discussing APR's on credit cards v's bank loans, he can get a loan at 11.8% PA (i believe its what he said), but an MBNA card has an offer for him (as he has one of their cards) for 4 years 6.9% APR (0.5% per month) 

he wants to over pay anyway, like he would with a bank loan, so set a monthly figure, so without going into exact figures, what would the difference be?

as in, whats the difference per £100 or £1000?

i said the credit card one isn't the way to go, but am i wrong?


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## organgrinder (Jan 20, 2008)

Without throwing the figures into a spreadsheet, you can work out the approximate difference by using a flat rate calculation instead of the apr.

The apr is the actual percentage rate you are paying but the flat rate calculation is good for estimates. The flat rate of interest is approximately half the apr rate.

If you take a loan of £10,000 at an apr of 11.8% over 4 years, an approximate figure for the total interest payable can be calculated by taking a flat rate of 5.9% (half of 11.8%), multiplying that by the initial sum borrowed, £10,000 to give interest of £590 a year x 4 years = £2,360.

The credit card loan is the same. Apr Interest rate of 6.9% equates to a flat rate of c3.5%. On a loan of £10,000, that's £350/year in interest or £1,400 over 4 years.

The credit card loan also gives the potential for overpayment which the bank loan may not. However there is always the risk with the credit card that you don't make the full repayments each month and you end up with an unpaid balance at the end.

Partly it depends on your discipline.


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## bidderman1969 (Oct 20, 2006)

Cheers for that chap, I shall point him in this direction :thumb::thumb:


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## Taxboy (Aug 23, 2006)

Dependent on his credit rating he might be able to subsequently transfer any balance to a 0% card with no transfer fee. Can't be cheaper than that. Have a look at Money Saving Expert dot com for details on how to do this

Sent from my SM-T800 using Tapatalk


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## beambeam (Mar 16, 2007)

Another one for MSE website for advice on these matters, been bouncing my debt about 0% deals as much as possible whilst I dwindle it down.

As for loans, I found Hitachi personal finance to be superb for overpayments as the site is very easy and quick to access. The full figure with interest is what you pay off but if you make overpayments that figure is adjusted monthly to take that into account.


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## Radish293 (Mar 16, 2012)

the secret to using 0% balance transfer credit cards is, set up a direct debit for the minimum payment. never spend on them and remember to move to again before the 0% runs out. I once had £70K of my mortgage on 0% credit cards saved me a small fortune.


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