How is minimum credit card payment calculated?

indianamom · 08:15 PM

How are minimum payments on credit cards calculated.

I can hardly make my minimum payments and I would like to know if there's any way to negotiate the amount you pay each month. I'm going to have to do this if they don't want me to default because pretty soon I won't be able to make the minimum either.

Floppster · 06:51 AM

It depends from Credit Card to Credit Card. Banks have different ways of calculating the minimum payment.

Some credit card issuers only set the interest as the minimum ((open balance /100)*(APR/12))open balance). Some say interest + 1% of balance and some just go by 1% up to 5% of the entire balance.

If you hardly can afford paying the minimum you probably have an issue. You may be able to lower your APR however since you have trouble paying the minimum and the bank knows how much you spend they probably won't lower it. Than you would have to look into Consolidation service which may be the smartest thing. May I ask you how much you approx. owe in credit cards ? How much is your APR ?

fffresh · 11:57 AM

From what I recall Bush changed it a few years back from 2% of the balance to 4% of the balance each month for major credit cards.

It does sound like some sort of legitimate debt consolidation may be the way to go here.

indianamom · 07:46 PM

I have a little over $24,000 in debt on my cards.

I have two Bank of America cards that have the bulk of the balance on them. No matter what I say or do they won't work with me at all. I want to be able to keep paying them but I need them to lower the rate so I can pay my balances. The interest rates are over 20% and they had doubled them out of the blue and that is what really hurt me.

I have heard a number of things about Bank of America doing this to people even in the mainstream media. They are the biggest but they also seem to be the most unfair.

jhudson · 09:28 PM

If they minimum payment is controlled by law they really should make an exception for it in times like these.

Gumball · 08:38 AM

Quote:

Originally Posted by indianamom

How are minimum payments on credit cards calculated.

I can hardly make my minimum payments and I would like to know if there's any way to negotiate the amount you pay each month. I'm going to have to do this if they don't want me to default because pretty soon I won't be able to make the minimum either.

The minimum amount differs dependent on my credit card - it tends to say on my statements in the small print how it's calculated.

If you think you are struggling, it's worth calling before you actually struggle to meet a payment - I'm sure the companies would rather know in advance that you are having problems and be able to neogtiate with you, than have to talk to you after the problem has happened.

JEFF COGA · 03:41 PM

Quote:

Originally Posted by indianamom

I have a little over $24,000 in debt on my cards.

I have two Bank of America cards that have the bulk of the balance on them. No matter what I say or do they won't work with me at all. I want to be able to keep paying them but I need them to lower the rate so I can pay my balances. The interest rates are over 20% and they had doubled them out of the blue and that is what really hurt me.

I have heard a number of things about Bank of America doing this to people even in the mainstream media. They are the biggest but they also seem to be the most unfair.

Background info.... the reason banks jack up the interest rate is this, you are a high risk (justification, righht?)... BUT the reason behind is this... when banks jack up interest rates to borrower who can barely make min payments... the balance grows fast!!! (rule of 72) Why is this good for the bank? Bigger write offs... all they do is discount your defaulted loan and sell them to a 3rd party collection agency for pennies on the dollar. Then the collection agency will try to collect the full amount. (more to it then that...)

Ok now for BOFA... the reason they bumped up the interest rates is... 1/3 of your FICO is based on available credit to balance ratio... if you have high balances on your card... then you have a high ratio... which means... your fico will go down. When the FICO goes down the bank all ways has the right to jack up the interest rate.

Keep in mind credit card is an unsecured debt... techinally they cannot come after you. They may put a judgment against you (the collection agency) if you have assets. If not, how do you squeeze blood out of a turnip? You cant...

08:15 PM	#1
indianamom Gold Member Join Date: Oct 2008 Location: Bloomington Posts: 35	How is minimum credit card payment calculated? How are minimum payments on credit cards calculated. I can hardly make my minimum payments and I would like to know if there's any way to negotiate the amount you pay each month. I'm going to have to do this if they don't want me to default because pretty soon I won't be able to make the minimum either.

06:51 AM	#2
Floppster Centurion Member Join Date: Sep 2008 Location: US Posts: 189	It depends from Credit Card to Credit Card. Banks have different ways of calculating the minimum payment. Some credit card issuers only set the interest as the minimum ((open balance /100)*(APR/12))open balance). Some say interest + 1% of balance and some just go by 1% up to 5% of the entire balance. If you hardly can afford paying the minimum you probably have an issue. You may be able to lower your APR however since you have trouble paying the minimum and the bank knows how much you spend they probably won't lower it. Than you would have to look into Consolidation service which may be the smartest thing. May I ask you how much you approx. owe in credit cards ? How much is your APR ? __________________ Intellectuals solve problems. Geniuses prevent them. - Albert Einstein 1879-1955

07:46 PM	#4
indianamom Gold Member Join Date: Oct 2008 Location: Bloomington Posts: 35	I have a little over $24,000 in debt on my cards. I have two Bank of America cards that have the bulk of the balance on them. No matter what I say or do they won't work with me at all. I want to be able to keep paying them but I need them to lower the rate so I can pay my balances. The interest rates are over 20% and they had doubled them out of the blue and that is what really hurt me. I have heard a number of things about Bank of America doing this to people even in the mainstream media. They are the biggest but they also seem to be the most unfair. Last edited by indianamom : 10-28-2008 at 07:49 PM.

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11:57 AM	#3
fffresh Centurion Member Join Date: Apr 2008 Location: the edge of the world Posts: 412	From what I recall Bush changed it a few years back from 2% of the balance to 4% of the balance each month for major credit cards. It does sound like some sort of legitimate debt consolidation may be the way to go here.

09:28 PM	#5
jhudson Green Member Join Date: May 2008 Location: Maine Posts: 17	If they minimum payment is controlled by law they really should make an exception for it in times like these.