Credit card installment is a kind of consumption mode that many people will choose now. It seems that there is not much money in each installment, but it is actually a huge pit! Credit card is a necessary mobile payment tool for many young people. If you can't afford to pay more, you have to pay in installments. But many people don't know how bad the credit card is in installments. The small edition of sihai.com will show you:
For example, the credit card bill is 10000 yuan, which is paid off in 12 periods. The handling fee for each period is 0.66%, and the amount to be paid for each period is 899.33, including the handling fee 66.
The total sum of principal and interest for the twelve periods is 10792. At first glance, the annual interest rate is 792 / 1000 = 7.9%.
It seems that it's OK to use this money to buy a financial product with a yield of 10% in a year and make money
But is it true?
Let's analyze it carefully:
You paid 833.33 in the first month, and you still owe the bank principal 833.33 * 11
By the second month, 833.33 * 2 had been paid, and the principal owed to the bank was 833.33 * 10
...
In a simple conversion, the bank has lent 833.33 principal to you for (1 + 2 +... + 12) months, and the actual annualized interest rate is (total interest / actual months * 12) / principal = (792 / 78 * 12) / 833.33 = 14.6%!
7.9% v.s 14.6%, twice as fast!
The reason why there is such a big gap is that although you are repaying the principal every month, the service charge of installment is still collected by the bank according to the initial installment total of 10000 yuan!
Isn't it a hole?
The relationship between the installment rate and the actual annualized interest rate can be calculated by such a formula:
Assuming that the total loan amount is m, the number of installments is n, and the handling fee for each installment is a%
Total handling charge: m * a% * n
Actual principal: M / n
Loan time (period): 1 + 2 +.. + n = (1 + n) * n / 2
Actual annual interest rate = 24 * a% * n / (n + 1)
Why the installment interest of credit card is so expensive
First, find out how to calculate the interest after the principal. For example, small a loaned small B1 ten thousand yuan, and agreed to repay 60 yuan of interest every month, and repay the principal after one year's maturity, so the interest of one year is 720 yuan, and the annual interest rate is 7.2%, which is what we usually call the real interest rate. But the credit card installment uses the equal principal and interest method to calculate, although each month repayment amount is invariable, but the principal reduces unceasingly, causes the fund utilization rate not to be high, therefore calculates the interest to be high.
In order to buy something we love for a long time, sometimes it's more convenient to use credit card installment. Installment really reduces our repayment pressure, but the price paid is really gold and silver, so we must calculate the real interest rate before installment, which will reduce your loss.