It will be easier to understand how credit card interest rate is calculated on your BOBCARD Credit Card with the help of an example. Suppose a credit card has the below-given details associated with it.
| Credit card interest rate |
3.50% per month | 42.00% per annum |
| Transaction date |
1 July 2022 |
| Total amount due |
Rs. 10,000 |
| Minimum amount due |
Rs. 500 |
| Statement date |
6 July 2022 |
| Amount due date |
26 July 2022 |
| Next statement date |
6 August 2022 |
If the cardholder fails to pay the Minimum Amount Due (M.A.D.) by 26 July 2022 then they’ll face the following penalties:
- Late payment fee
- BOBCARD credit card interest rate at average daily reducing balance method
However, if the cardholder pays off more than the minimum amount due, say 50% which comes out to Rs. 5,000 on 21 July 2022. And then don’t use the credit card till the next statement generation date, 6 August 2022. Then the interest earned will be:
Interest that must be paid is the sum of interest accumulated, on the full outstanding amount (from the date of transaction till the date of partial payment) + Interest accumulated on the remaining amount (from the day after partial payment was made and until the upcoming statement generation date).
Interest from date of the transaction to partial payment date : [21(Number of days from date of the transaction to partial payment date)*10,000 (Full amount) x 42.00% (Interest Rate per annum)] ÷ 365 (Days in a year) = Rs. 241.64
Interest from partial payment date to statement generation date : [15(Days between partial payment date to the day before statement generation date) x 5,000(Remaining amount) x 42.00% (Interest rate per annum)] ÷ 365 (Days in a year) = Rs. 86.30
Total interest amount that needs to be paid = Rs. 327.94 [241.64 + 86.30]
