How do I calculate future credit card interest rate with inflation?

Discussion in 'Finance & Banking' started by Ema24, 8th Aug, 2014.

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  1. Ema24

    Ema24 Member

    31st Aug, 2011
    Melbourne, VIC
    Hi all!

    I am trying to figure out what calculation I need to learn to be able to work out the above question.

    My example I have been given is:

    I am not understanding how to work this out.

    I have 2 credit cards:
    one at $22,000 at 18% annual interest and another at $5000 at 22% annual interest.

    This year I paid interest of $3770.00 (for both credit cards)

    It is important that I add annual inflation (at 3%) on the balance owing from the items I purchased, and then I need to re-calculate interest on this new balance - i.e. next year my interest owing will expected to be $5212.

    My Question is: How was the above worked out?
    I really need to understand this, as I must use the calculation to project 5 years of these credit card examples. i.e. interest charged in 2014/15 will be $5212, I then need to work out 2015/2016, 2017/2018 up until 18/19.

    I am not looking for my work to be done for me, honest. I am simply wanting to understand this, as I really have tried and tried to work this out using different calculations and I simply do not get it.

    Apologies for the long question;

    Thank you in advance.