Do you get charged interest if you only pay the minimum each month a on credit card? - Tilted Forum Project Discussion Community

Jesus Pimp · 06-08-2004, 05:12 PM

For the most part I've paid off my balances on my credits each month. Recently I've been tight on money so I've been paying the minimum. I haven't really noticed much increase in interest for just paying the minimum. Should I worry?

eribrav · 06-08-2004, 06:00 PM

You will pay interest on all the outstanding balances each month. As your balances grow, so will your interest charges.

Paying credit card interest is a sucker's game. Do what you have to do now to get those paid off before you get in a deep hole.

Yakk · 06-08-2004, 06:03 PM

You are charged interest if you only pay the minimum.

For normal purchases, there is a "grace period" in which you are charged no interest. This is typically until the next bill. I am unsure if the "grace period" exists if you have an unpaid balance on your card.

However, any unpaid balance on your card accumulates at the interest rate your card has (typically 10% to 20% / year). This seems small. It grows exponentially, and exponential growth gets out of hand if you let it run away for any length of time.

Suppose the min payment was 5%/year (or .4%/month) of the balance, and the interest rate was 15% (or 1.17%/month). Then, the amount owed would increase by a whole 0.77%/month.

This works out to about 10%/year increase in your debt.

After 10 years, your debt and your payments have increased by a factor of 2.5.

After 30 years, they have increases 16-fold.

And that is assuming you aren't charging more and more on your card as your minimium monthly payments go up and up.

So, in the short term, it won't hurt all that bad. But it isn't sustainable.

splck · 06-08-2004, 08:44 PM

Don't keep a balance on your card....it'll creep up and kick you in the ass.

Jesus Pimp · 06-09-2004, 04:06 AM

Sneaky! Thanks! I only have a few 400-500 on my credit cards right now. I try to pay 100 or so each paycheck.

gar1976 · 06-09-2004, 08:44 AM

Since you're getting screwed (probably at around 20-25% interest) on your card balances, you might try a few things.

Try putting off paying other bills (eg, utilities) for a few weeks, and then pay the remaining balances off later. Usually takes a couple times for utilities to charge you late fees, and they're usually pretty minor.

Do balance transfers on the high interest cards to new cards with lower fixed fees for six months.

Your problem is a cash flow (timing) issue, problem is the credit card company will win this one all the time.

Just stick them into a drawer until they're paid off.

NeoSparky · 06-14-2004, 12:31 PM

Other than transfering to a lower interest rate the best thing to do is call up your credit card company and ask for a lower rate. If they dont then ask for the cancellation department. Company's give some crazy deals to keep you as a customer..

06-08-2004, 05:12 PM	#1 (permalink)
Jesus Pimp The Original JizzSmacka	Do you get charged interest if you only pay the minimum each month a on credit card? For the most part I've paid off my balances on my credits each month. Recently I've been tight on money so I've been paying the minimum. I haven't really noticed much increase in interest for just paying the minimum. Should I worry? __________________ Never date anyone who doesn't make your dick hard.

06-08-2004, 06:03 PM	#3 (permalink)
Yakk Wehret Den Anfängen! Location: Ontario, Canada	You are charged interest if you only pay the minimum. For normal purchases, there is a "grace period" in which you are charged no interest. This is typically until the next bill. I am unsure if the "grace period" exists if you have an unpaid balance on your card. However, any unpaid balance on your card accumulates at the interest rate your card has (typically 10% to 20% / year). This seems small. It grows exponentially, and exponential growth gets out of hand if you let it run away for any length of time. Suppose the min payment was 5%/year (or .4%/month) of the balance, and the interest rate was 15% (or 1.17%/month). Then, the amount owed would increase by a whole 0.77%/month. This works out to about 10%/year increase in your debt. After 10 years, your debt and your payments have increased by a factor of 2.5. After 30 years, they have increases 16-fold. And that is assuming you aren't charging more and more on your card as your minimium monthly payments go up and up. So, in the short term, it won't hurt all that bad. But it isn't sustainable. __________________ Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

06-08-2004, 08:44 PM	#4 (permalink)
splck it's jam Location: Lowerainland BC	Don't keep a balance on your card....it'll creep up and kick you in the ass. __________________ nice line eh?

06-09-2004, 04:06 AM	#5 (permalink)
Jesus Pimp The Original JizzSmacka	Sneaky! Thanks! I only have a few 400-500 on my credit cards right now. I try to pay 100 or so each paycheck. __________________ Never date anyone who doesn't make your dick hard.

06-08-2004, 06:00 PM	#2 (permalink)
eribrav Junkie Location: upstate NY	You will pay interest on all the outstanding balances each month. As your balances grow, so will your interest charges. Paying credit card interest is a sucker's game. Do what you have to do now to get those paid off before you get in a deep hole.

06-09-2004, 08:44 AM	#6 (permalink)
gar1976 Custom User Title Location: Lurking. Under the desk.	Since you're getting screwed (probably at around 20-25% interest) on your card balances, you might try a few things. Try putting off paying other bills (eg, utilities) for a few weeks, and then pay the remaining balances off later. Usually takes a couple times for utilities to charge you late fees, and they're usually pretty minor. Do balance transfers on the high interest cards to new cards with lower fixed fees for six months. Your problem is a cash flow (timing) issue, problem is the credit card company will win this one all the time. Just stick them into a drawer until they're paid off.

06-14-2004, 12:31 PM	#7 (permalink)
NeoSparky Crazy	Other than transfering to a lower interest rate the best thing to do is call up your credit card company and ask for a lower rate. If they dont then ask for the cancellation department. Company's give some crazy deals to keep you as a customer..