I'm curious about how my bank is calculating the interest on my credit card. No matter what I do, I cannot make the numbers add up!
Below is a photo of my latest statement. It's for 13th June - 12th July. There were no purchases, but an opening balance of £907.19, and a payment of £9.07 on 8th July.
The statement says that interest for my entire balance (all purchases) is "0.026% per day (9.95% APR)". The statement clearly says on the back that interest is calculated daily.
So, I took the opening balance and added 0.026% per day, then subtracted £9.07 on 8th July, then continued adding 0.026% per day, until 12th July. I ended up with a closing balance of £904.98 (theirs is £906.73).
I've subsequently tried all sorts of different calculations, and cannot come to their figure without increasing the rate quite a bit. Even if I round up every days value to the nearest penny, I only get £905.32.
So; how are they calculating this? Or is their maths wrong and I'm being charged higher than the rate being claimed?
-- Update: 03/08/2013 --
Spoke to someone at my banks credit card department today. She didn't really seem to understand the maths. When I told her I'd multiplied by 1.00026^30 she asked where there was a 1!
She did, however, say:
- Yearly rate: 9.95%
- Monthly rate: 0.793% (this wasn't on the bill)
- Daily rate: 0.026%
- Interest is calculated daily
- The interest period was 29 days (though this makes the numbers slightly further out, not closer!)
However, this good information (well, confirmation of what I had) was somewhat undermined when she said "Some interest will be calculated from the opening balance (£907.19) and some from the closing balance (£906.73). This doesn't really make sense (how can you calculate interest using a figure that is derived from the interest?!).
So said she'd have to pass the info on to their "back office" who can send me a full breakdown.
I look forward to receiving it! :-/