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1. ## Credit Card Computation for Interests

Hi Guys,

anyone here who knows how to compute Interests and Finance Charges for credit card revolvers?

I wonder how big the interest will become based on the average daily balance computation of citibank or bpi? the formula seems vague so does anyone actually know how?

2. I got this from Citibank:

To compute for the finance charge:

1. The sum of all transactions for the day is computed.
2. The sum of all transactions is multiplied by the applicable interest rate, then multiplied by the number of days until the Statement Date and divided by 30. The result is the finance charge for the day.
3. Payments made on the same day are deducted from the Outstanding Balance. This results to the new Outstanding Balance that will be carried over to the next day.
4. The above process is repeated until the Statement Date.

So the longer you're not paying, the more finance charge is assessed. I hope that helps.

3. ## Good Question ; Good Answer

Based on the above, let us try to put some figures :

1. The sum of all transactions for the day is computed.
e.g. P 2,000.00 + P 500.00 - P 1,000 payment = P 1,500

2. The sum of all transactions is multiplied by the applicable interest
rate, (then multiplied by the number of days until the Statement
Date and) divided by 30. The result is the finance charge for the
day.
say 10 days till statement date :
P 1,500.00 x 3.5% per month/30 = P 1.75/day x 10 days
= P 17.50

3. This results to the new Outstanding Balance that will be carried
over to the next
Balance P 1,500.00 + P 17.50 = P 1,517.50 this months balance

Suppose you did not pay anything, thus :

P 1,517.50 x 3.5% p.m. = P 53.11
hence :

Last Months Balance + Interest = This Month's Balance
P 1,517.50 + P 53.11 = P 1,570.61

new effective interest rate = 3.5305%
(and increasing )

4. There was a very clear example given to me by BDO's online team in my email previously. I asked how much will it cost me if my outstanding balance is P10,000 and I only paid for the minimum due amount. The email representative did the computation for me and explained everything step by step. I would have posted her reply here, but, I already deleted it before since I always pay in full.

I would suggest you email Citibank and give amounts so you'll have a clearer picture.

5. i found this blog post on the net:

6. ADB - average daily balance. For BPI, I beleive you gotta compute for this first. Then you have to multiply it with your finance charge.

All purchases for the month will be revolved on the next cut-off.

7. I think any debtor can ask one's credit card company on how they compute interest on a particular billing cycle. I'm not sure if its in the Consumer Act, The Truth in Lending Act, BSP Reguations that has such a provision.

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