What Is The Minimum Credit Card Payment Formula?

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frugalsam
 
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What Is The Minimum Credit Card Payment Formula?

Postby frugalsam » Wed Dec 08, 2010 2:27 pm

Almost every online source I have consulted only talks about the outdated minimum credit card payment formula. Today it no longer a flat percentage of the balance right? Don't most banks now calculate the credit card minimum payment as 1% + finance charges per month or something along those lines?


infomaniac
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Postby infomaniac » Fri Dec 10, 2010 11:01 pm

The Federal Office Of Comptroller recommending in 2005 that a different minimum credit card payment formula be used which forces payment towards principle. Despite contrary popular belief the formula is not based on a flat percentage of total balance as some erroneously report.

This is what makes up the formula that is most prevalent for 2011.

  • accrued interest during the billing period
  • applicable fees including but not limited to those for late payments and exceeding credit limit
  • 1% of the total balance
Note that this payment formula for credit cards was only a recommendation and the issuer may use a different formula at their discretion.

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Cucumber
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Postby Cucumber » Sun Dec 19, 2010 5:09 pm

During the recession I think Chase was doing minimum payments of a flat 4% or 5% for some accounts, like the ones that had super sweet fixed rate for a life of balance deals.
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