Interest formula on Personal Line

[Guest]

Is there a formula for calculating interest on a Personal line of credit?
(there is no amortization date--it is an ongoing loan). Currently I owe
$5,342.62 and interest rate is 5% (says calculated on a daily basis). My
interest on last statement was $20.93 (28 day period, with a $200.00
payment). I am adding on $15,000 next month and want to be able to determine
when my original is all paid off.

Thanks for help.....

 

[Dave O]

What was the balance at the beginning of the 28-day period?

 

[Guest]

$5,521.69

 

[Dave O]

Forgot to ask: on what date was your payment?

 

[Guest]

My payment was on Dec 29. It was 28 days from Dec 10 - Jan 6. Interest was
added on Jan 6. Note--if interest rates change my rate will also go
up....(it is currently prime 4.25 + .75)

 

[Dave O]

Hi, Elissa-
I thought I could nail this one, but I think there are too many details
about the specific terms of the loan that are leaving me in the dust.
I tried to set up a schedule of daily activity, but I couldn't get to
your exact numbers, I think for a couple reasons:
1. I went to the Federal Reserve web site
http://www.federalreserve.gov/releases/H15/data/d/prime.txt
to get a history by day of prime rate, and got numbers that were
different from yours (you quoted 4.25%, but the Fed says 5%).
2. I don't know if a single prime rate, maybe from the beginning of
the period, applies to the whole month, of if daily prime rates apply.
3. I'm not sure if your bank considers a year to be 365 days or 360.

Here are the headers and calculations I used: if you learn some
pertinent details you should be able to replicate the loan data. Also,
please don't be shy about hammering your bank for specific details
about your loan. They're required by law to disclose those details,
and they ought to be eager to help you understand the full details.

Column A: Date
Column B: Daily Balance Forward (equals previous day's ending bal)
Column C: Daily interest
Column D: Cumulative interest
Column E: Payments
COlumn F: Ending Balance (equals B+C-E when E is expressed as a
positive number)
Column H: Daily Prime rate per Federal Reserve

I used the formula that banks generally use to calculate daily
interest, in column C:
=ROUND((B5*((1+H5+0.75%)^(1/$E$1)))-B5,2) where E1 is the number of
days in a year. This can be 365 or 360.

Sorry I couldn't get this to work for you. If you'd like to see the
spreadsheet I ginned up, let me know and I'm happy to send it.
Dave O
CycleZen at yahoo dot com

 

[Guest]

Thanks for your help Dave....(I am from Canada--so our Prime rate would be
different) Appreciate your time though....I will try calling the bank--but
was hoping someone out there had already something set up for this--guess not!

Elissa