Bank taking more off interest than balance every month

ohsoconfused

Hi after reading on here I am now about to find a new credit card to transfer my husbands balance to but was just wandering if it was right that his Bank (lloyds tsb) credit card was taking more off the interest every month than it was his actual balance?

He has been paying £15 every month, and from that they have been taking £10.44 for interest Every month! but only actually paying £4.56 off the balance! it seems steep that they can take almost double the ammount for interest every single month!.

I'm so glad I had a look at his statement so now I can do something about it.

Thank for your help as always guys

HappyMJ

What is the interest rate charged? The outstanding balance and the required minimum repayment..

Normally credit cards charge around 24.9% interest at 2.079% per month but only require 3% of the outstanding balance as a minimum repayment.

If you had £500 outstanding then the interest would be £10.40 and the minimum repayment would be £15.

So your calculations are correct. If there is only £500 outstanding then use your next pay packet to pay it off in full. As you now have no money then use the card again to make purchases. As you are paying it off in full each month there is no interest charged. Then gradually reduce your spend each month and the card balance will gradually reduce to NIL.

CLAPTON

ohsoconfused wrote: »

Hi after reading on here I am now about to find a new credit card to transfer my husbands balance to but was just wandering if it was right that his Bank (lloyds tsb) credit card was taking more off the interest every month than it was his actual balance?

He has been paying £15 every month, and from that they have been taking £10.44 for interest Every month! but only actually paying £4.56 off the balance! it seems steep that they can take almost double the ammount for interest every single month!.

I'm so glad I had a look at his statement so now I can do something about it.

Thank for your help as always guys

what's his balance
what is the APR
what is the minimum payment

but basically he needs to pay more each month

typically, paying the minimum each month means the debt hangs around for up to 10 years and the total interest paid is more than double the amount borrowed.

fozmcfc

Maybe it could be caused, if he has withdrawn cash, bought forgein currency or used it on a gambling site.

My Egg card had a lot of cash withdrawals/gambling transcations on it and eventually I got a message from them to say, that my minimum payment would not prevent me from going over my card limit.

ohsoconfused

His balance is £680.22
minimum payment £13.84

not sure what the APR is on it, its an old card that he has'nt actually used for years and years hes just been paying off it, he does'nt even have the card anymore. All I have is his latest statement here.

PasturesNew

ohsoconfused wrote: »

it seems steep that they can take almost double the ammount for interest every single month!.

It's not steep, it's set by the rate of interest being paid.
If he paid, say, £25/month they'd still take the same amount of interest ... and his balance would be reduced by the full extra £10.

You pay interest on the full amount... then the balance of what you pay chips away at the debt.

ohsoconfused

fozmcfc wrote: »

Maybe it could be caused, if he has withdrawn cash, bought forgein currency or used it on a gambling site.

My Egg card had a lot of cash withdrawals/gambling transcations on it and eventually I got a message from them to say, that my minimum payment would not prevent me from going over my card limit.

It definately has not been used for gambling/cash withdrawals or even forriegn currency as he does'nt go abroad.

ohsoconfused

Thanks guys, so it looks like the best bet here would be to start looking for another card for him with 0% for an ex ammount of months so all he pays comes off the balance every month and keep doing that everytime the ex ammount of months runs out. Thanks

CLAPTON

10 in interest on 680 is about 20% APR which is prettty reasonable thesedays

he simply needs to pay more per month and get rid of the debt.