Capital One Minimum Payment Changing

Spendit_Sue

Hi

I have received an email from Capital One today advising that there is to be a change to my minimum payment from January 2014 statement - can anyone explain further, please?

The email states:

"From your January statement your minimum monthly payments will no longer be based on a fixed percentage of your outstanding balance. Instead your minimum monthly payment will cover:

• 1% of your outstanding balance
• all monthly interest
• any default sums you may have been charged
• 1/12th of your annual fee (if applicable)

It also states in the email that "you are likely to see little or no change to your minimum payment"

Surely if I have to pay 1% of the balance plus the normal monthly interest rate it will end up more expensive? I presently owe a balance of £7,000.

Would appreciate a further explanation if anyone can shed any light on this, please.

[Deleted User]

What is your current minimum payment? And current interest rate?

I doubt there will be much difference.

Gromitt

Assuming your interest rate is 34.9%, then monthly interest would be about £200, plus 1% of the total, £70, so I'd assume about £270 for the next month. It would be slightly less the month after, as you'd be gradually paying off the card.

dtaylor84

Spendit_Sue wrote: »

Surely if I have to pay 1% of the balance plus the normal monthly interest rate it will end up more expensive? I presently owe a balance of £7,000.

The smaller the payment you make each month, the more expensive it will end up as you will take longer to pay off the card and pay more interest.

To say whether your minimum payment will change, and how, we would need to know the rule that is currently used to calculate the minimum payment as well as the new rule...

FLAPJACK

I've had the same email.

The way I read it is that my present minimum payment is 3% of the outstanding balance plus interest (mine is 1% above the base rate so 1.53% apr.)

I would therefore expect to see my minimum payment decrease by 2%....which is seems a dangerous situation as it will take longer to payoff the balance.

As I pay a chunk off each month I treated the email a for info only.

marvin

dtaylor84 wrote: »

The smaller the payment you make each month, the more expensive it will end up as you will take longer to pay off the card and pay more interest.

To say whether your minimum payment will change, and how, we would need to know the rule that is currently used to calculate the minimum payment as well as the new rule...

1% + interest due....

for me it cuts my payment to 1/3rd what paying now which not happy with so will have to change the DD from the minimum to something else.

I have been paying off an old balance with an interest rate of less tan 3% (froze it when they wanted to increase the rate a little) so monthly payments not been much but money better used elsewhere than paying this off.

For it to make no difference then the interest has to = 2% of your remaining balance. (on £7000 this is 33.33% or £210 interest) any less it is less payment any more it is more.

Less will be being paid off if less payment is made.

Spendit_Sue

Thank you all for the replies, though I am still not sure what changes it will make to my own account.

My balance is approx £7,000 and I currently pay an interest rate of 14.33% which works out at £84 for this month. I am not sure what percentage the minimum payment is but I am being asked for minimum payment of £205 (3%?). If anyone can work out from this information what I am likely to pay when the new calculations come in I would be very grateful.

I understand that paying the minimum will take much longer to pay off but I am not in a position to do anything else at the moment, but I am hoping my situation will change next year as I have other plans for the future.

Sue x

opinions4u

1% of your balance is £70. Interest is £84. Assuming no other fees your minimum payment will be c£154.

Carry on paying over £200.

Spendit_Sue

opinions4u wrote: »

1% of your balance is £70. Interest is £84. Assuming no other fees your minimum payment will be c£154.

Carry on paying over £200.

Thank you so much for this. I can now stop panicking! Yes, I will continue to pay the £200, as this is what I have budgeted for. Phew, the relief!!

Sue x

dotdash79

Perhaps when companies make these changes they should show real world examples on how this will work compared to the past way.

Spendit_Sue

dotdash79 wrote: »

Perhaps when companies make these changes they should show real world examples on how this will work compared to the past way.

You are so right, Dotdash, but these companies seem to revel in their customers confusion! Of course it can often result in customers having to telephone the company to find out more - and, of course, the company pockets the cash from these calls!!