How is the annual interest rate for credit card bill installments only 7.5 calculated? Many cardholders choose to pay their credit card bills in installments. Firstly, they can get interest-free, secondly, the monthly repayments are smaller, and thirdly, they can also increase their balance through installments. What attracts them most is that the credit card installment fees are too low. Of course, this low is not really low. The reason for this illusion is that they think that the actual annual interest rate of credit card installment is the monthly handling fee * 12. Take the China Merchants Bank credit card as an example. If you pay 10,000 yuan in 12 installments, the handling fee for each installment is 0.66. The monthly principal repayment should be 10,000/12=833.33 yuan. The handling fee for each installment is 66 yuan, which is only 792 per year. The equivalent annual interest rate is also It’s about 8.0. The interest rate calculated this way is actually not bad, but the real interest rate is not calculated this way.
How to calculate the real annual interest rate for credit card bill installments? What I want to tell you here is that the annual interest rate of 8.0 given above is not the actual interest rate, because although the credit card bill installment is repaid in equal amounts of principal and interest, the total handling fee is spread equally to each month, and it needs to be repaid every month. The principal and interest are the same. But in fact, every time you repay a part of the principal each month, the principal will be reduced, but the credit card bill installment fee is fixed until the last installment of your repayment. Someone has summarized the algorithm of the real annual interest rate. The actual annualized interest rate = single-period handling fee * number of installments * 24 / (number of installments 1) Here again, taking a China Merchants Bank credit card worth 10,000 yuan divided into 12 installments as an example, the real interest rate = 0.66 *12*24/(12 1)=14.6 is almost twice as much as 8.0, so installment of the bill is not cost-effective.
Some people will say that since it is not cost-effective, you can always repay the loan in advance. It should be reminded here that most bank credit card bill installments can be repaid in advance, but the remaining unpaid handling fees for early repayment must be repaid in one lump sum. The above is the relevant introduction of "The annual interest rate of credit card bill installment is only 8? The real interest rate is not that cost-effective!" I hope it will be helpful to everyone. From the above, it can be seen that the real interest rate of credit card bill installment is at least around 14.6, and the longer the installment period, the higher the interest rate. If you repay the loan in advance, the remaining handling fee will also be inevitable, so you must consider it carefully before installment.