minimum payment danger

barlos1973

Starting kinda sort my finance out, and actaully reading some of the very helpful advice offered here.

Having read the miimum payment danger on credits cards article, I was shocked to learn that for the last year and half I have hardly paid any of mine credit card off

Anyway looking at my latest statment, it says I have a balance of £922 and the minimum payment due is £18.50. What I didnt realise until checking on this site is that£12.13 is for interest alone! At this rate it would take me 10 years to pay off......

Anyway If I pay lets say £50 before the due date of 3/12/09 I presume this minimum payment will not have to be paid by d/d as I have been doing for too long. However will I still have to pay the massive £12.50 interest out of the £50 I pay?

cifpower

What card do you have? Some cards (like RBS, NatWest and Ulster Bank) take the minimum payment by direct debit regardless of any extra payment made. Others work in the opposite way.

It stands to reason, though, that the more you pay each month the less interest you will have to pay.

Dabooka

The interest is owed, nothing you can do about it. Best piece of advice is continue with your minimum paymnets and make additional ones whenever you have the cash. The £50 will NOT replace your minimum payment by DD, that will come out regardless (unless you cancel the DD = not wise!).

So if you £50 available this month, pay £31.50 as additional payment.

Hope that makes sense.

EDIT: Sorry, I wasn't aware some will take it as minimum payment. Never owned a card like that before!

barlos1973

cifpower wrote: »

What card do you have? Some cards (like RBS, NatWest and Ulster Bank) take the minimum payment by direct debit regardless of any extra payment made. Others work in the opposite way.

It stands to reason, though, that the more you pay each month the less interest you will have to pay.

Its a Lloyds tsb airmiles

cifpower

barlos1973 wrote: »

Its a Lloyds tsb airmiles

IIRC they do not take your direct debit (or adjust it accordingly) if you make a seperate payment.

chattychappy

Interest is not based on the minimum repayment. (But the minimum repayment should be greater than interest.)

Interest is based on two things:

1. The interest rate
2. The balance over the month

Of course if you pay off more than the minimum and reduce any spending, your balance will go down faster. Then your interest will go down.

If your interest + spending is greater than your repayment, then it will go up and up.