do you get charged higher % ?

dimpski

Hi
apologies if the answer for this question is somewhere else but i am hoping someone can help/advise?

I have been looking at the snowballing calculator for clearing some credit card debts. In this it suggests only paying the minimum payment against the cards that have a 0% on but i am sure i read somewhere that if you only pay the minimum each month you get charged a higher interest rate when the 0% offer ends.
Is this correct?

comments appreciated.

dylanuk

I think what you've read is that if you only pay the minimum - then you won't clear the balance - which will result in paying a higher rate of interest (than the 0% rate) when the 0% period ends.

The standard rate at the end won't change depending on how much you've repaid. However, some credit cards (for example Virgin) have a record of bumping the standard interest rate just as you come off a 0% deal - though I don't think this has anything to do with how much you've repaid.

Of course, if you've only paid off the minimum your balance at the end of the 0% deal will be larger, and so if the credit card issuer does bump up the standard rate as you come onto it they would stand to make more out of you in interest.

I think the chances of them bumping up the standard rate are just as likely whether or not you pay more than the minimum though.

CannyJock

dimpski wrote: »

Hi
apologies if the answer for this question is somewhere else but i am hoping someone can help/advise?

I have been looking at the snowballing calculator for clearing some credit card debts. In this it suggests only paying the minimum payment against the cards that have a 0% on but i am sure i read somewhere that if you only pay the minimum each month you get charged a higher interest rate when the 0% offer ends.
Is this correct?

comments appreciated.

Calculator here http://www.stoozing.com/msoc/snowball_calc.php

I think the thing you read was speculation. It's normal for certain providers to lure you in with a 0% promo offer and a "typical" rate around 16%, only to bump the rate up significantly before the 0% period expires (and because it's a variable rate they can try and get away with it). No evidence I've saw that paying more than the minimum is rewarded with a lower rate at the end of the promo.

Typhoon2000

Anecdotal evidence suggest paying just the minimum suggests to the lender that your in trouble and thats all you can afford. This can lead to rate jacking when you promotional period ends as your are assumed to be a higher lending risk.

dimpski

Thanks for your comments.
Still debating whether to pay an extra £5 on each card (5 in total) so not paying just the minumum whilst usisng the snowball calculator system.

Butterfly_Brain

My Barclaycard went from 14.5% - 22% :eek: thankfully I have paid my card off now and if I want anything I will pay it off straight away