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Annual Fee
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Calculating Interest Rates

  • Interest Rate :
  • Annual Fee :


Different banks have different policies in calculating interest rates, and this policy or formula is often explained in the terms and conditions that you sign once you activate a credit card. Some interest rates vary daily, and some are fixed. To make things simpler to understand we have used approximations that can help you get an estimate of the monthly finance charges on your credit card.

  1. Determine the monthly interest rate. Some banks charge 3.5% monthly, and some charge only 3%. To simplify, let’s use 3%, or 0.03.
  2. Now, multiply this by the balance remaining on your credit card at the end of the billing cycle. Let’s say your balance is P10,000.
  3. 10,000 x 0.03 = 300

    This means that the interest you need to pay is P30. Your balance at the start of the next cycle is P10,000+P300 = P10,300.

  4. The typical minimum payment required is P500 or 6% of the minimum amount due, whichever is higher. Six percent of P10,300 is P618, which is higher than P500, so you are required to pay at least P618.

This is a simpler estimation. Most banks use a more complicated “daily” computation of finance charges, where they add up all your retail transactions, the principal portion of your instalment availments, retail fees, and the previous day’s outstanding balance. They deduct payments you make during the same day, to get your new retail outstanding balance. Then, they multiply your new retail and new cash advance outstanding balance for the day by the monthly interest rate. The result is divided by 30. This is the finance charge for the day. It is not included in the outstanding balance until statement date. The entire process is repeated everyday until your next statement date.

Be very careful about paying only the minimum amount due, because doing so may mean you’re not even covering the interest fees. If you cannot afford to pay your entire balance off, at least strive to pay twice the monthly minimum.  This will ensure that at least a portion of your repayment is applied to the balance and not just the interest rate.

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Featured Articles:

Featured Article 5

Ever thought of getting a credit card but don’t know where to start? For majority of cardholders we know, credit cards are terrific tools that certainly have very great advantages.

We at have surveyed many customers and here is what came out…

Its very handy payment. That’s the big thing, right? You don’t have to worry about being robbed or something because you don’t have that big cash with you. Even if you’re just making small purchases, it’s a big help. Plus, the fact that we are in the on-line shopping age, it’s a total must have.

On the spot loans. When you’re short of cash, a credit card will be there to save you from the embarrassment of not being able to pay as it will help you make up for your purchase. To avoid any fees, just pay your balance in full.

You have no idea as to where you’re spending your money? People have the tendency to say they don’t know where half of their money went. With a credit card, you can easily track your purchases on your monthly payments. So if you think your wife spent too much for the month, check on your bill, who knows, it might even be you…

It’s easier to pay off. It’s easy to pay credit card bills. All you have to do is find an ATM with your checking or an easy account transfer. Good news is you don’t have to wait a month to pay it off. And guess what, some even lets cardholders pay their bills ONLINE. So say goodbye long lines; Hello to convenience!

You get rewards.

Every time you make transactions you earn point or “rewards” that you can exchange for either gift checks, vouchers, exclusive items or maybe the cash back system. We’re not saying that you use your credit card non-stop to avail of these, but as a matter of fact, it is a nice bonus.

Very exclusive deals. How would you spell exclusive? Its “c-r-e-d-i-t-c-a-r-d”. Why? Because you get a lot of high class services that are only available for those people who hold the cards. Sometimes its discounts on products, dining and traveling first class. Remember the times when you really wanted to buy something and you were able to buy it because of the discount my credit card was able to give me.

We can go on and on with these, but nothing is really important than learning it by experience. Everything has its ups and downs. It’s up to you, as the card holder, to become responsible in how you manage your money. Look into the bigger picture of how credit cards make life easier and who knows you might just even love it. Just be responsible and a word of advice, pay your dues on time, all the time…