Is a credit card agreement providing for interest at 2.4% per month calculated on the previous month’s balance calculated on a monthly basis calculated on an annual rate of 28.8%?
Ontario, Canada
The following excerpt is from Solar Power Network Inc. v. ClearFlow Energy, 2018 ONCA 727 (CanLII):
In my view, the decision in Smith v. Canadian Tire, distinguished by the application judge, is applicable to this case. Smith dealt with credit card agreements providing for interest at the rate of 2.4% per month calculated on the previous month’s balance. The agreement stated that the equivalent yearly rate was 28.8%, a rate that did not take into account the effect of compounding if the balance was not repaid each month.
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