Got my charge account statement from the department store. I owe $60.09, and the minimum payment is $1. There is a note on the bill: Even if you make no more charges using this card, if you make only the minimum payment each month, we estimate you will never pay off the balance.
Is there anyone who would send only a $1 and not think it would take 5 years to pay this off if there were no interest charged?
It’s fine until you get a contract that doesn’t allow you to pay it off until they tell you you can. In other words, until they’ve milked as much interest out of you as possible. Ugh.
“Is there anyone who would send only a $1 and not think it would take 5 years to pay this off if there were no interest charged?”
So what you are asking is if there is anyone who thinks 60 divided by 60 does not equal 1?
Ooh, tough one.
I think the statement over how long it will take to pay off the bill by making only minimum payments is required by law, so they’re not just putting it on there to be funny.
Not sure what you mean here, but surely the point is that there is interest charged, and the interest is likely more than 1/60th of the balance, so if you only pay off $1, the balance will actually increase.
I’m pretty sure that in the UK, the minimum payment is not allowed to be less than the interest charged (barring occasional "payment holidays), although on my Barclaycard the minimum is only about a pound more than the interest charge.
Back when I used to have credit cards there were months I paid the minimum because I had other bills to pay. But I doubt I’d ever just send in $1. The messages are just generated by computer though, it will make a lot more difference to someone with an outstanding balance of thousands of dollars and making the minimum payment of $50 instead of sending the several hundred they need to pay it off in a reasonable time.
What’s killing me lately, is the message on my credit card bill is ‘if you pay X amount, you’ll pay off in Y years, if you pay the minimum you’ll pay off in Y+Z years’, except X is less than the minimum. Somebody needs to check their math!
$1 a month will pay off the balance as long as the interest rate is less than about 20% APR.
Erm, if they will let you pay off $1 a month as a minimum, shouldn’t you go out and spend shitloads such that the $1 a month is massively accumulating debt - but you don’t care cause you will never, ever pay it off?
Be a load of practically free stuff for $12/year!
I assume things are set up so that’s not possible, but I’ve never heard of only having to pay $1/month on a card. Not that I really know anything about this stuff, I have only one store card and I got it by accident, I hadn’t realised they were giving me credit (well actually it’s a catalogue card).
And if you can find a store card which charges less than 20% APR then you’re doing pretty well. A lot of them are closer to 30%.
Not necessarily true. I went to pay off a credit card, but due to a return I accidentally miscalculated the amount due. I under paid by pennies. I was hit with the $1.50 minimum finance charge. Even though the bottom of the statement listed a ‘normal’ APR (< 20%), my finance charge for that month was over 200%.
Paying $1 with a $1.50 min finance charge & your balance would *increase *every month.
Your minimum payment is based on your balance so just because it’s $1 for a $60 balance doesn’t mean it wouldn’t increase if you went on a spending spree.
Oh, you’d be surprised at what some people think. Or actually DON’T think.
Let’s say they’re offered a “great” deal to purchase something for $7,000, with a low interest rate of only 5% for 36 months! Deal! I can’t tell you how many people think that by making their minimum payment of, say, $50 per month, every month, for 3 years, that they’ll be paid up. Nope! 5% for 36 months means that you only pay 5% interest on the balance for 3 years. After 3 years the interest rate will go up, usually to something outrageous like 24.99%. Just because a revolving loan says a rate applies for 36 months does not mean it will be paid off in 36 months! Oh, the humanity!
Even I know that there is always a “gotcha.” “0% interest for 12 months?” That means that I’d better pay off that loan before 12 months is up, otherwise the accumulated interest for that past year will show up all at once. :rolleyes: