Credit cards cannot be owed principal and only pay interest.

After paying by credit card in installments, the cardholder needs to repay the loan in installments to the bank and pay handling fees. The bank will deduct consumption funds and handling fees from the cardholder's credit card account in installments based on the cardholder's application, and the cardholder will repay according to the monthly credit amount.

In other words, the monthly repayment includes the principal of each installment and the handling fee. Therefore, a credit card cannot owe principal and only pay interest.

In general, the one-year credit card installment fee is lower than the one-year cash withdrawal interest of 18, and higher than the bank's one-year commercial loan interest of 5.31. It is worth mentioning that commercial bank loan interest rates have been reduced several times since last year.

However, the standards for credit card installment fees and cash withdrawal interest have rarely changed. Although the standards for credit card installment fees vary from bank to bank, the calculation method is roughly the same.

Assume that the installment amount is 1,200 yuan, divided into 12 installments, with each installment (month) repayment of 100 yuan, the handling fee is 0.6/month, and the actual monthly deduction is 100 1200 × 0.6 = 107.2 yuan.

If other factors are not taken into account, the convertible nominal annual interest rate is 7.2. However, the cardholder does not always owe the bank 1,200 yuan. In the last month, he actually owed the bank only 100 yuan, but the bank still owes the bank 1,200 yuan. A handling fee of RMB 1,200 is charged.

According to calculations, the true annual interest rate paid by cardholders is approximately 15.48. According to the correct calculation formula, it should be 1200*6*(1 6)^12/((1 b)^12-1)=103.94 yuan, which means an extra handling fee of 3.2 per period.

Extended information:

Most domestic banks have credit card installment services. Installments are generally divided into shopping mall (POS) installments, through the Internet, and mailings according to different occasions. "Mail order installments" and bill installments are carried out.

1. Shopping mall installment

Also known as POS installment, it means that cardholders go to shopping places and make purchases at "malls" where installment can be carried out. When checking out, please show the shopping mall's credit card that supports installment payment and indicate that you need to pay in installments. Then the cashier will swipe the card on a dedicated POS machine according to the number of issues required by the cardholder (such as 3 issues, 6 issues, 12 issues, etc., a few shopping malls support 24 issues).

Note: Cardholder identity verification is required when making installment purchases in shopping malls, so remember to bring your ID card.

Shopping mall installments are generally free of charge for three installments. The rates for 6 and 12 periods vary from bank to bank. Installment products can generally be purchased as long as they are normally sold in the shopping mall. In many cases, cardholders can also bundle multiple items together at checkout and then make installment payments.

2. Mail order installment

It means that the cardholder receives the installment mail order catalog manual sent by the card-issuing bank (or the bank's online installment mall) and chooses from limited products. Then order through the online installment mall, call or fax the mail order installment application form, etc. to the bank for installment mail order.

There is generally no handling fee for mail order installments regardless of the number of installments. However, due to the long ordering cycle (in many cases it will take more than 15 working days to get the product) and the relatively cumbersome return and exchange process, it is recommended to compare before purchasing.

3. Bill installment

This is the most convenient installment method. Basically, all card-issuing banks can support this installment method, and it is easy to apply for. Users only need to submit an installment application to the card-issuing bank by phone or other methods after swiping their card for consumption and before monthly bills are issued.

However, please note that each bank will stipulate some special cases. For example, speculative card swiping will not be successful in installments. So before proceeding with staging, be sure to read the staging manual carefully.

The disadvantage of bill installment is that the handling fee cannot be waived. The longer the number of installments, the higher the handling fee, which must be borne by the cardholder himself.

Baidu Encyclopedia-Credit Card Installment