From: robertmlaws@yahoo.com (Robert)
Newsgroups: uk.finance
Subject: Re: Credit Card Question
Date: 20 Jul 2004 07:15:56 -0700

"Terry Harper"  wrote in message news:...
> "MadCrazyNewbie"  wrote in message
> news:gJmdneyIlPQXeWHdSa8jmw@karoo.co.uk...
> >
> > Don`t want to sound daft but ......... If a credit card, for example
>  Capital
> > One has a intrest rate of 29.9% is this per month or per year?
> >
> > I.E - If i had £1000 on my card would the intrest of 29.9% make it a
>  balance
> > of £1299.00 for my next statment?
> 
> No, that's the APR, which has little if any connection with what actually
> happens. If you look in your terms and conditions, it probably tells you
> that 2% of the outstanding balance will be added to the sum outstanding at
> the statement date each calendar month. In other words, £1,000 with nothing
> paid off will rise to £1,020.


How so?

2% pcm compounded for a year: (1.02)^12 = 1.268, so £1000 would rise to £1268 

Robert