Minimum Payments on Credit Cards

Jellzer

Hi all,

I'm hoping someone can help me. I apologise if I come across as stupid but I can't get my head around minimum payments and how much these are likely to amount to.

So for example If I have a credit card that has O% interest for 12 months and I purchase flights costing a £1000. How much would my minimum payment be each month if the conditions of minimum payment of this credit card is the following:

Greater of 1% of balance plus interest or £25

Thanks!! :cool:

[Deleted User]

£25 during the 0% period.

DevilPigeon

I thought it would be (assuming no further spend):

month 1 = £10
month 2 = £9.90
month 3 = £9.80
.
.
month 10 = £9.14
month 11 = £9.04
month 12 = £8.95

total paid = £113.62, balance remaining = £886.38 (which will then be attracting interest at whatever the normal card rate is)

[Deleted User]

Not quite - you're forgetting the £25 minimum payment.

DevilPigeon

Deleted_User wrote: »

Not quite - you're forgetting the £25 minimum payment.

Yes, you're right. It would be £25 per month, £300 over the 12 months. The remaining £700 would then be attracting interest.

redpete

Jellzer wrote: »

Greater of 1% of balance plus interest or £25

interest is zero so "1% of balance plus interest" = "1% of balance"

Balance in month 1 = £1000, 1% of this is £10.

£25 is greater than £10 so the minimum payment will be £25, and will be for the duration of the 0% interest offer.

£25 a month for 12 months is £300 in total, so you'd end up with £700 when the interest starts to be charged.