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how much interest is he making?

Hi my partner owes 900 that he is paying off at 30 a month. This is annoying me as he has the 900 in the bank and he could pay it all off in one go.

Also it is me who has to make the payment for him every month and that means that for the next 30 months I have go to an office and pay the money. I have been doing this for the past year (900 is what is left to pay) and this is beginning to piss me off

So assuming he is making 6% APR gross interest on this money in his high interest bank account how much interest will he be actually making?

So how do I work out, starting with 900, making 6% APR gross interest and withdrawing 30 per month what he will make? And if it is not all that much I will give him the money to save me making a bus trip (free) every efin month?

Thanks Jennie

Reply to
Jenny
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(I'm crap at finances, so feel free to ignore this !)

God, I can imagine !

Is he paying interest on the outstanding amount ? - if so, this will almost certainly be costing him money in the long run, as he'll be paying compound interest over the next 30 months on the outstanding...

Sod that, tell him to set up a standing order, pay it off in one go, or do the bloody running around himself - I wonder how quickly he'll tire of the trip into town when he can't offload it onto you ?

Reply to
Colin Wilson

I would say about 70 quid gross, assuming he isn't paying any interest on the debt.

6% APR ~ 0.5% per month (I'm not sure exactly how banks compound it, but the difference wont be much). He gets 30 months interest on the last 30 quid, 29 months on the second to last etc.

If he pays tax then you need to take 20% (or 40% for higher rate) off this, which is probably about the same as your bus fair?

Can't he set up a Direct Debit or Standing Order?

Reply to
Gareth

You can do a rough calculation like this . . He currently has 900, but after 30 months will have 0 - so the *average* amount he will have is 450.

450 at 6% yields 27 p.a gross, or 67.50 over 2.5 years. Assuming he is a standard rate taxpayer, this will be taxed at 20% - so the total net amount is around 54. So each of your 30 trips will save him less than 2!
Reply to
Roger Mills

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