Does anyone know how they figure credit card “minimum monthly payment”?
It’s a larger amount than “interest only”
Does anyone know how they figure credit card “minimum monthly payment”?
It’s a larger amount than “interest only”
Fine Homebuilding is excited to be the official media partner of the 2024 Building Science Symposium series! This event offers builders, tradesmen, architects, designers and suppliers to discuss topics ranging…
"I have learned so much thanks to the searchable articles on the FHB website. I can confidently say that I expect to be a life-long subscriber." - M.K.
Get home building tips, offers, and expert advice in your inbox
Fine Homebuilding
Get home building tips, offers, and expert advice in your inbox
© 2024 Active Interest Media. All rights reserved.
Get home building tips, offers, and expert advice in your inbox
Become a member and get instant access to thousands of videos, how-tos, tool reviews, and design features.
Start Your Free TrialStart your subscription today and save up to 81%
SubscribeGet complete site access to expert advice, how-to videos, Code Check, and more, plus the print magazine.
Already a member? Log in
Replies
It's different for each one and is based on your agreement.
I've had this credit card for 8 years and I have never paid any attention to any of the paperwork.I'm guessing it's in the fine print when I first started?Although I do think I get "account info" periodically and if I take the time to read it I could answer the questionThanks for your info
It's ten bucks more than you can afford.
Spheramid Enterprises Architectural Woodworks
Repairs, Remodeling, Restorations
They kill Prophets, for Profits.
BRING BACK SPLINTY.
lol I wrote a check for $85 to visa and I hate paying them interestMy balance is about $4,000.I figure interest for the month at about $75 and so I guess $10 is going toward the principal.Anyway $85 is 25% So maybe they calculate 3-4% for what is owed in principal
I hate paying the bastids interest also. Therefore, I pay off the balance each month. NO interest or minimum charges!
But from time to time, the CC companies will send out a new "agreement" detailing their new rules. If'n you don't object to them (called an "opt-out"), they can change their terms whenever their bonuses aren't big enuff.
It's interest plus some fraction of the principle, with usually a $10 or so minimum. In fact, the government about a year back twisted the arms of credit card companies to up the minimum payment so it'll get paid off in only 20 years instead of 40 (or something like that) if you make minimum payments.
The card companies (in more normal times, at least) like to stretch the terms out as long as possible to collect more interest.
Thanks Dan, I think when they made those changes you're referring to they also opened the gates to allow the credit card company to really tag you if you are late with a paymentBy that I mean they raise the interest rate quite a bit
They've always been able to do that.
Conscience is the still, small voice which tells a candidate that what he is doing is likely to lose him votes. --Anonymous
I discovered recently that home equity lines of credit are still being offered at very favorable rates, close to prime, to people with good credit scores. Prime is now at 4%.
Great way to consolidate debt, save some serious cash every month on interest, improve your credit score and open up lots of investment possibilities.
I did just the reverse...moved a home equity balance of about 30K to 0% credit card a few years ago. Rather not have my home out there as collateral (no mortgage on it). I'm now down to about 6K on the third 0% offer in a row and will have it paid off by the time this one expires. Key is not to miss a payment though, or they nail ya. I missed one payment by accident and had to shop around for a new 0% card, but got one no problem.Steve
Funny, I've worked it both ways as well. As you say, it's real important to make payments on time.
Another good idea is to read up on how to improve your credit rating. There are some peculiar things which seem positive, like cancelling credit cards, but actually cost you points.
Having recently arrived at a temporary tight spot in personal finances, just when credit has also gotten tight, I'm real glad that I've made the effort to keep my credit history clean and my score as high as possible.
Having equity in my home also helps. Gives me a lot of flexibility to borrow on a low interest line of credit which only requires that interest payments be made each month.
I have to admit that it took me several tries, using credit cards, to learn how to avoid the high interest and fees. Those banks definitely got their pound of flesh too. But not any more.
Edit: Congress recently passed a bill which requires that credit card companies give us three month's notice before changing our rates.
But we still have to stay informed by reading all the notices they send out. Otherwise we'll miss the rate change and be back in the same boat, paying through the nose until we can find a better deal.
Edited 11/9/2008 6:52 am by Hudson Valley Carpenter
Watched a show on CNBC with a fellow that worked with Fair Issac the company that devised the credit scoring.
Another good idea is to read up on how to improve your credit rating. There are some peculiar things which seem positive, like cancelling credit cards, but actually cost you points
He said this is no longer true! Also to maximise your score, us 15% of credit lines, only. Always, always pay on time!!!!!!!!!!
Yes but that's taking what should be a short term debt and stretching it out to 15 or 30 years. Even at such low interest rates what you paid $1.00 for will cost you $3.00 by the time it's paid off..
With groceries no being paid for on credit cards what you eat this week will be paid for in 30 years?
Oh, if you can be extremely disciplined you can pay off high interest credit cards quicker without the high interest but the temptation to run up some more debt is what got so many people into home equity trouble in the first place..
Your idea certainly has merit though but the realities of the situation should scare the beejezus out of anybody cpabale of thinking the whole process through..
Yes but that's taking what should be a short term debt and stretching it out to 15 or 30 years. Even at such low interest rates what you paid $1.00 for will cost you $3.00 by the time it's paid off..
That's true, if you don't have a solid plan for paying off the debt on the line of credit fairly quickly.
Valid point.. I mean I did just that but when the economy slowed down I was forced to keep paying modest payments on my home equity line rather than the quick payoff I'd intended.
Granted it's better than credit card debt but it does put home ownership at greater exposure than credit card debt would.. If I had kept that credit card debt and defaulted on that they could not take away my home. However because I have secured that debt using the home equity if I now default on that my home is at risk..
Perfect world I would make all the payments as originally planned.. It's not a perfect world and while doing this allowed me to prolong my reserves while making payments on time. There is a finite limit to my reserves..
You'll note I'm not in disagreement with you.. I am merely pointing out some of the ramifications that need consideration before entering such an arrangement..
As we're both using excellent examples from our own experience, it's all good stuff.
My current situation, living in SoCal, gives me many opportunities to contract small jobs at above average prices. Net profits, excellent. So if I get in any kind of bind here, I'll just make a call or two.
Another reason why I like the low interest home equity line of credit right now is being able to take advantage of opportunities to buy useful things at lower than usual prices.
For example, I've been looking for an older Toyota box van as my new work truck and to make moving back to New York much simpler.
Off topic: What can you tell me about checking out automatic transmissions, if I happen to run across a Toyota truck with an AT? I have a pretty solid background in auto mechanics but I've never had to deal with an AT.
The automatic transmission used by Toyota in their bigger vehicles has a somewhat shady reputation for durability and reliablity. Unusual for Toyota but a quick superficial glance at the required maintinace is lower than maintinace for Ford, GM & Dodge automatics which may explain it.. However, the whole story doesn't seem to be lack of maintinace rather the size and durability of various componants. On top of that there are relatively few of those larger transmissions out there so knowledge of them is somewhat scarce.
I would be extremely reluctant to purchase a larger Toyota with an automatic untill the reliablity issue is cleared up. My main fear is that I understand how defective designed componants can reeneter the parts stream following recalls.. so it would be very common to have a transmission shop repair the transmission using the same quality of componants that failed in the first place.
Rebuilding automatic transmissions is not something I recommend to those with no experiance doing so. There are countless tricks, tools, and techniques required which makes the proper overhaul problematic without access to those tricks tools and techniques..
In fact going from say a GM 400 to a GM 700H is differant enough that a person skilled on one with struggle with the later without some insite or guidance..
Excellent information and reasoning. Thanks.
BTW, I wasn't suggesting that I'm interested in rebuilding an AT, just the opposite. It only takes a few minutes, reading any shop manual about overhauling them, to appreciate why it's a specialized part of the trade.
I was really hoping to hear that Toyota's ATs are bullet proof in that application and that there was some simple procedure to test them for wear. Otherwise it's much wiser to look for a manual tranny, even though they're hard to find in used box vans.
My thought was/is that any time a particular vehicle is adapted to do heavier work than it was designed for, the life expectancy of the drive train will be compromised, particularly the links in the drive train.
As the cost of an AT rebuild is about 50% of what I'd like to pay for an older model Toyota box van, the AT reliability issue becomes very significant.
Had my fill of what companies do by saying the check arrived late and then tag a $25+ late fee on.... Blood money in my way of thinking.... Captial One was sited as being a real killer in doing that...
I payoff the credit card's full amount and there hasn't been a time when I called and question the penalty that they haven't taken off the late fee.
To futher combat that from happening is that I either set up an automatic draft on the utility, phone, etc. accounts, or the credit cards I use the most have either a local branch or store so I can go in a pay directly...
Doing those few little things cut the worry of missing a bill or it being lost or arriving late...makes it easier in keeping a good credit history.
Bill
Edited 11/9/2008 12:43 pm ET by BilljustBill
I do an automatic payment in full on all recurring bills, too. About three years ago i got a notice from my AT&T M/C that they were cancelling me. I guess the 2% from the merchant wasn't enough for them; they wanted someone who would pay interest and penalties, too.I'd had that card for about 20 years. I had to memorize a new number at my advanced age....the horror.