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Why is the amount I reduce my CC by less every month?

I have only just noticed this on my Halifax CC and haven't really looked at the others.

I do only pay the minimum and the APR has remained constant throughout the period in question but I have noticed that every month the actual amount I pay off (The payment minus the interest charged) is less and less each month.

For example.

April £13
May £11
June £5
July £3

I don't understand if the APR has not changed and the my debt has been going down each month how can the interest be different and by so much?

At this rate in a couple of months my interest will be more then my minimum payment.

Also my minumum payment is supposed to be 1% of the balance but it's actually higher. I know I should pay more anyway but if they can't work out 1% of a figure it mught explain why the odd interest charges.

Can I legally request to see exactly how they work the charges out on my account?
Official DFW Nerd Club - Member no. 1100 (Un-Confirmed)
Total debt at lightbulb moment (January 2008) - £84,972.28
Total debt now (June 2010) - £74,871.45
Mortgage £26,456.31, Secured Loan 19,673.71, Credit Cards £28,741.43
Proud To Be Dealing With My Debts

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    It's not 1% of balance. It's 1% of balance plus fees and interest. Otherwise your balance would probably go up.

    Yes you can ask them for an explanation. What sort of balance are you now carrying?
  • immoral_angeluk
    immoral_angeluk Posts: 24,506 Forumite
    10,000 Posts Combo Breaker
    Time to start paying more than the minimum by my reckoning!
    Total 'Failed Business' Debt £29,043
    Que sera, sera. <3
  • Davewils
    Davewils Posts: 134 Forumite
    As you have already alluded to. The min payment is a percentage of the balance +fees & interest. So as you pay off the balance, obviously the amount you have to pay next time reduces eg:

    10% of £100 = £10 so your new balance = £90
    10% of £90 = £9 so your new balance = £81
    10% of £81 = £8.10 so you new balance is £72.90

    and so on and so forth. This is the reason why it is recommended you pay off a fixed amount each month rather than the minimum payment. Becuase as each month goes by you're paying off less and less when you could clear the debt much quicker without shelling out more cash than you have in the past.
  • MrsManda
    MrsManda Posts: 4,457 Forumite
    edited 16 July 2010 am31 9:12AM
    Just paying off the minimum payment each month is always going to take a long time to repay and as you accrue more interest, more of your monthly payment is going to be paying off the interest rather than the balance. Have a look at have a look at the minimum repayments calculator on this site.

    The reason you may be finding that the minimum repayment is often more than 1% of the amount you owe is that the minimum repayment for Halifax is the greater figure of either 1% of the amount you owe OR an amount equal to any interest, fees and credit card repayments cover premimums + £5.

    This stated on your statement and in the T&Cs. If you look at the transaction & interest section in the summary of your account on your statement and work out 1% plus any late fees or charges on your account + £5, does this explain how much your minimum payment is?
  • ElJayco
    ElJayco Posts: 22 Forumite
    Thanks for the explanation folks.

    Partner has just started a new job yesterday so paying off more then the minimum of our many cards is high on the list of priorities.
    Official DFW Nerd Club - Member no. 1100 (Un-Confirmed)
    Total debt at lightbulb moment (January 2008) - £84,972.28
    Total debt now (June 2010) - £74,871.45
    Mortgage £26,456.31, Secured Loan 19,673.71, Credit Cards £28,741.43
    Proud To Be Dealing With My Debts
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