Ha! I bet that last bit got your attention.
Do credit cards compound their interest daily or monthly?
How about a typical auto loan?
I'm trying to decide the best way to pay for a motorcycle if I find one.
The interest rates for used bikes are so high (like almost 8%) that I'm tempted to put the bill on my credit card. If I can find a way to make it a purchase (10%) vs. cash advance (13.4%)
The advantage being that there would be no lien if I put it on my card. That makes it easier to take it out of country but more importantly makes it easier to pay off sooner. Loan companies make it as hard as possible to pay on the principal only. They want to drag it out as long as possible. With my CC card, I can apply money in large chunks without that being applied to the interest every time.
Additionally, I am going to be getting several large chunks of travel pay all spring long. You gotta love TDY per diem.
So, I can pay this thing off pretty damn quick.
The tricky part is to get it where the funds are used as a purchase and not a cash advance, 13.4%.
A friend suggested using paypal to launder the money back to myself to avoid the cash advance rate. Of course, you then need to figure in the $2.9% paypal fee (~$174.00, each way)I have no idea if this is legal or not. I've given it some thought and can't see any reason why it shouldn't be, but I've been wrong before.
Anyway, I didn't mean to rant. I was just wondering if anyone knew how they compound the interest so I can crunch some numbers.