CC Minimum payment lower than interest?

mbs1

Just notice on my AA Card,

The balance is circa £1300

The minimum payment is £26.02 and the estimated interest is £31 something.

Why is the Minimum payment so low?, I thought the Minimum payment would always cover the estimated interest pplus say £5 so the balance does actually go down?

Whats going on here?

I rang them and they say the APR is 16,9 p.a? How have they worked out the two figures?

Cheers

NickX

Something is not adding up here.

The £26.02 is about 2% of £1300, so your Minimum Payment is 2% of the Balance.

However if the APR is 16.9%, I work out your estimated interest to be around £18.32

So, I'm not sure where this estimate of £31 is coming from.

Is any of the balance made up of Cash Advances which are accruing interest at a higher rate ?

mbs1

Nope, its just 1 transaction, at DFS...?

They said its "just" an estimate,

Next bill is due in 2 weeks, but why is it so high?

NickX

mbs1 wrote: »

Next bill is due in 2 weeks, but why is it so high?

I don't know, but £31 is not representative of an APR of 16.9% on a debt of £1301.

If they do charge you this amount, then I would query it with them.

Bismarck

Estimates to me is usually the interest that is based on the standard rate for the card..not the rate that is applied to the account - that depends on you and your offer at the time the statement is calculated....