Definition of 'Minimum Payment' for Credit Card

pennypincher3562

Hi

I would appreciate if someone could help me define the term 'minimum payment' with regards to credit cards.

Does the term 'minimum payment' include interest payable?

Thanks
PennyPincher3562

[Deleted User]

The min payments is the lowest amount you need to pay in a statement period.

The most common min payment is 1% of balance plus fees and interest. It can be more, and there may be a minimum amount the payment can be.

It's possible that some older cards may have lower min payments, calculated differently. However, new cards must have a min payment of at least 1% plus fees and interest.

pennypincher3562

Thanks ZX81. I have a slight issue I am trying to resolve.

I am not used to using credit cards, and am bit naive with regards to credit.

I have an 'interest free card', and the card's interest free period expired this month.

I phoned the card company 2 months ago, and ask will the minimum payment increase once the interest free period expires. The woman on the phone said 'no.'

I got the bill in today, and of course the payment has increased - £31 for the minimum payment, and £50 interest.

I am confused here, should she not have not said, yes, the minimum payment will increase, as you will be paying interest as well?

Thanks
PennyPincher3562

[Deleted User]

She should have said that the minimum payment calculation would not increase (which may be what she meant), but that the actual amount would increase, assuming the balance was not reduced.

But anything she said won't override the agreement and the min payment definition within it.

EarthBoy

Deleted_User wrote: »

It's possible that some older cards may have lower min payments, calculated differently. However, new cards must have a min payment of at least 10% plus fees and interest.

You mean 1%, not 10%.

[Deleted User]

EarthBoy wrote: »

You mean 1%, not 10%.

Indeed I did.

I've changed it now, so we'll just pretend it said 1% all the time, and that you were just seeing things, rather than admitting I made a mistake.

:embarasse

pennypincher3562

I've been thinking about this. I appreciate what she sold told me on the phone, can't over-ride terms and conditions. However, if she did give me the wrong information, I have real issue with that.

I phoned 2 months before the interest free period expired, because I had one of 2 intentions:

1) To possibly pay of the balance in part or full.
2) To possibly transfer the balance to another card.

However based on the info she gave me that 'the minimum payment will not increase', I took no action. The minimum payment (% plus interest) has jumped from £30 to £80 in one month.

Do you think I should take this further? They must have recorded my phone-call.

Thanks
PennyPincher3562

[Deleted User]

I don't think there is any point. I doubt if they have recorded the call. But it's up to you if you think it's worth it.

Regardless of the min payment, you knew you were going to be charged interest - so why not pay if off if you're able?

MallyGirl

Her terminology might not have been tight enough for you but she would have no way of knowing if your actual minimum payment would change since she wouldn't know what you might choose to spend, and most minimum payments are a percentage of outstanding balance. She would only have been able to comment on the calculation method not changing

Ebe_Scrooge

As others have said, she probably meant that the calculation method is unchanged. The only difference would be that the amount of interest payable has increased, but they still use the same method to calculate it.


I'm not sure what you mean by this :


"I had one of 2 intentions:

1) To possibly pay of the balance in part or full.
2) To possibly transfer the balance to another card.

However based on the info she gave me that 'the minimum payment will not increase', I took no action."


Surely when you got your statement, you saw what the minimum payment was. You then had the option of paying the minimum, the total balance, or something in between. If you're wanting to now transfer the balance to a different card, there's nothing stopping you from doing that. I fail to see how you've been disadvantaged ?


By your own admission you're not all that familiar with credit cards. With all due respect, I think your "complaint" is due simply to your lack of understanding of how payments are calculated. On your statement it will clearly explain how minimum payments are calculated, it's worth reading it so that you're aware in future.

chattychappy

pennypincher3562 wrote: »

I've been thinking about this. I appreciate what she sold told me on the phone, can't over-ride terms and conditions. However, if she did give me the wrong information, I have real issue with that.

Actually, whilst T+Cs remain in place (and might even include provisions to the effect that they cannot be varied verbally or by staff other than directors etc), generally you should be able to rely on what staff tell you. I agree with the analysis of other posters - indeed the calculation hasn't changed. But it was clear enough to me what you meant and the answer wasn't really fair in the context in which you asked it.

If you are actually out of pocket as a result - ie if you had been given a more appropriate answer then you would have done something differently, then perhaps they will offer something if you make a complaint. The evidence isn't really clear, but CCs often make small "goodwill" payments because it isn't worth their while having the ballyhoo of dealing with escalating complaints.

But from what you said, it's not clear that the "wrong" answer actually caused you any loss. If the minimum payment had indeed remained the same (ie the answer was correct), then you would still have been on the hook for interest.

Personally I'd let it go and look at it as a paid(?) lesson on how CCs work!