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Snowball Calculator

MB1980
Posts: 21 Forumite
Hiya everyone,
I recently calculated my debts on the snowball calculator, and it seems nice and worked out, however what if the minimum payments on my debts get higher if I only pay the minimum amount on them? I have 2 credit cards on variable APR's and i've found out that if I only pay the minimim, the payment next month is even higher
I recently calculated my debts on the snowball calculator, and it seems nice and worked out, however what if the minimum payments on my debts get higher if I only pay the minimum amount on them? I have 2 credit cards on variable APR's and i've found out that if I only pay the minimim, the payment next month is even higher

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Comments
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Hi MB1980
Not sure what you mean by variable APR's...
AFAIK the minimum payment due for a credit is the interest + a certain percentage of the debt (varies from card provider to card provider) so, in theory, your debt shouldn't increase (although it will reduce painfully slowly!)
PigletLBM Nov 07Challenges: A Payment A Day Challenge 2012 Joined 08.03.12PADding Total:March £57.65 April £10.10DFWNerd - 1041-Proud to be dealing with my debts!Pesky CC March 2012 £2916.73:eek:Debt@March 2012 (inc OD) £5615 DFD self imposed target Feb 20140 -
Hi MB1980
Not sure what you mean by variable APR's...
AFAIK the minimum payment due for a credit is the interest + a certain percentage of the debt (varies from card provider to card provider) so, in theory, your debt shouldn't increase (although it will reduce painfully slowly!)
Piglet
Hmmm I assumed that something was variable as i'm not spending on these cards, yet if I only pay off the minimum each month, the next months minimum is increased0 -
You don't have PPI on those cards do you?
What is the APR on them? if they are high APRs and older accounts then it is possible that the minimum can be less than the interest charged. Newer accounts cannot be like this.
In terms of doing the snowball I would change the % minimum payment so its higher than the contractual amount but covers at least the interest each month. That way the snowball won't work in a way that could take you over your limit.
If you cards show a monthly interest rate put that in as the ninimum % repayment. If it only shows an APR is divide it by 12 and put that in as the minimum % repayment (divide by 12 isn't quite correct but its not far off).A smile enriches those who receive without making poorer those who giveor "It costs nowt to be nice"0 -
You don't have PPI on those cards do you?
What is the APR on them? if they are high APRs and older accounts then it is possible that the minimum can be less than the interest charged. Newer accounts cannot be like this.
In terms of doing the snowball I would change the % minimum payment so its higher than the contractual amount but covers at least the interest each month. That way the snowball won't work in a way that could take you over your limit.
If you cards show a monthly interest rate put that in as the ninimum % repayment. If it only shows an APR is divide it by 12 and put that in as the minimum % repayment (divide by 12 isn't quite correct but its not far off).
Luckily i've closed both accounts down so there's no risk of me going over my limit (hopefully!!!!)
No PPI on either. One card is 14.9% and the other has to be around 20-somethingThe youngest card is about 5 years old.
I'll have to have a play about with the snowball tomorrow. All I want to do is get myself out of debt. Never thought it would be this complicated0 -
... No PPI on either.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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MB, do you mean the minimums showing on the Snowball calculator are increasing? Or the minimums on your CC statements?
If you have closed both accounts was that because you rejected new terms and conditions because they wanted to raise your interest rate on them?
If you are talking about the minimums on your snowball calc then that's how it's supposed to work. For example:
Say you pay a total of £100 per month to your credit cards (£50 to each. Assuming no charges are added for late payments or going over limits etc.). This will pay off that months interest plus a small amount of the actual debt. The interest you pay each month will fluctuate as it's calculated daily and some months have more days than others. But generally, your minimum payments will reduce. So the first month your CC minimums are £100. Next month your minimums are £99. Your snowball calc will show you need to pay (for simplicity) £49 to the debt with the lowest interest rated card and £51 to the higher rated card. But you're still only paying £100 per month. The following month your minimums are £98. The snowball will show you paying £48 to the lowest interest rate card and £52 to the highest. And so on. As long as you keep paying £100 per month (afterall you're used to paying this amount) and don't reduce that amount as your minimums come down, that's how to snowball.
It only really works if you are paying a bit more than the minimums, even if that is just £1 per debt.
Hope I've explained that ok.
PooOne of Mike's Mob, Street Found Money £1.66, Non Sealed Pot (5p,2p,1p)£6.82? (£0 banked), Online Opinions 5/50pts, Piggy points 15, Ipsos 3930pts (£25+), Valued Opinions £12.85, MutualPoints 1786, Slicethepie £0.12, Toluna 7870pts, DFD Computer says NO!0
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