BOA minimum payment change

canidothis

Hi, I have received an explanation with this months Bank of America CC statement informing me of a change in the way they are going to calculate minimum payments - there's a very useful tool to work out how much next bills minimum payment will be (going up by about £30!) - my question is if I dont use the card and pay only the minimum payment will the minimum payment amount increase or will it remain roughly the same - just like before they bought in the new calculations?

ie Do I only have one month of a £30 ish hike and then continue to pay roughly this higher figure each month - providing I dont spend of course?

Thanks in advance

NYGiants

The minimum payment for the Bank of America CC is 1% of balance + interest + fees (if any) so you should see the minimum payment come down slightly each month (probably not by much if you're only paying the minimum).

So as long as you don't spend on the card and don't incur any fees then your payments will always be slightly lower than the previous payment.

canidothis

Phew!! Thank u for that :beer:

NYGiants

The finance companies had to change the payment structure because in some instances the minimum payment wasn't even covering the interest on a debt so someone would spiral into a big debt just by paying the minimum. At least with the new structure a debt will come down (albeit slowly) as long as the card isn't being used or incurring fees.

A few people have complained on here that they will struggle with their new minimum payment but if they're struggling to pay 1% of balance + interest then they were struggling anyway. I personally believe that it should be at least 3% + interest but I think that would push too many people over the top!

CLAPTON

paying only 1% plus interest means it will take 100 months (i.e. 8 years and 4 months ) approx to pay the debt off

fleitner

CLAPTON wrote: »

paying only 1% plus interest means it will take 100 months (i.e. 8 years and 4 months ) approx to pay the debt off

It will take even longer, as the 1% is based on the actual balance, not the initial balance. So every month you pay back less and less.

For example, after paying 1% per month on a £10k debt for 100 month, you still owe approx £3660.
Assuming that you pay the greater of 1% or £25 off the balance, than it would take 238 months (almost 20 years) to repay the debt.