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CC interest vs minimum payment
GSingh
Posts: 8 Forumite
in Credit cards
This might have been spoken about before but....
My credit card bill has arrived and whilst I will be paying the balance in full I notice the minimum payment is £25 and if I pay that, and that only my interest next month is £26.89!
No wonder people are in constant cc debt!
My credit card bill has arrived and whilst I will be paying the balance in full I notice the minimum payment is £25 and if I pay that, and that only my interest next month is £26.89!
No wonder people are in constant cc debt!
0
Comments
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The minimum payment is based on the balance at statement date which will include paying off all the interest on that statement plus some of the capital balance. They do not make you pay an amount that is based on interest that may or may not be charged next month. In many cases there will be no interest charged next month even though the current statement shows there may be.0
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This might have been spoken about before but....
My credit card bill has arrived and whilst I will be paying the balance in full I notice the minimum payment is £25 and if I pay that, and that only my interest next month is £26.89!
No wonder people are in constant cc debt!
You sound like a full-payer with no interest showing on your current statement.
If you were to pay the £25 minimum and then got hit with £26.89 interest next month, your minimum payment next month would (probably) be £26.89 plus 1% of the total balance (including that £26.89). It could be slightly different for different card providers, such as Barclaycard, who would ask you to pay the greater of the 'Interest + 1%' method or 2.25% of the total balance.
So, you can now see that when you do get charged interest, your minimum payment will always include that amount as part of the minimum payment. Your minimum payment will never be less than the amount of interest showing on that statement.0 -
This might have been spoken about before but....
My credit card bill has arrived and whilst I will be paying the balance in full I notice the minimum payment is £25 and if I pay that, and that only my interest next month is £26.89!
No wonder people are in constant cc debt!
Yes, people who only pay the minimum will take a very long time to clear CC debt.0
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