In modern enviroment, credit card offers an efficient ways of making shopping with ease and secure. It offers a wide range of advantages like ease of purchase, protection of purchases, discounts from some stores, bonuses among other benefits.  These advantages have made this shopping payment method because people are able to spend in advance what they will earn in future. However, it doesn’t come without limitations. Among some of the limitations, is the high interest rates charged to the holders of the credit cards. To ensure you benefit optimumly from the service it is important to quantify the ammount charged by each of the credit card issuer. This will give me the basis of choice from which to aquire the credit card from. I prefer the lowest interest charged credit cards.

Interest=rate x balance ammount

Credit card annual interest charge=16.5% x $5,000=0.165 x $5000=825

Visa Student Card’s annual interest=10.8% x $5,000=0.108 x $5000=540

I would actually switch to student visa card because the annual interest with a constant credit balance of $5000 is less than that of credit card by 285.

Simple Interest

Buying a product whether it is an iphone, camera or a home appliance may proove difficult if you have inadequate funds to purchase the product when you need it. An easier option would be to buy the product on hire purchase, pay a down payment and follow it up with monthly payments while you use the product.

For example if I am to purchase a sumsung front load washing machine worth $670  from a higher purchase dealer who asks for 10% down payment and 12,(15%), equal monthly payments, then the downpayment is;

$670 x 10%= $670 x0.10= $76.

After making the down payment, the total ammount of interest paid on the remaining balance is calculated as follows;

15%x$670x12 – 90% x $670=0.15x670x12-0.9x670= $603

The 90% is the propotional ammount left after making the down payment. The monthly payment will be;

15%x$670=0.15x670= $100.5

$100.5 will be the monthly payment to the dealer for the hire purchase of sumsung front load washing machine.

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