Financial question?

Question

I want to make a large payment on a credit account that has a really high APR (almost 30%!!!). How do I tell the credit company that I want this entire payment ($500) to go to the balance and NOT the interest? I want to get this thing paid down because with an interest rate of 30% and a minimum payment of only $62, I'll never pay it off. I remember once being told to tell them to apply the payment to the "principle." Is this correct?

This is a medical credit card...I'm pretty sure I can't transfer the balance to another card. This card was the only way I could pay for the dental work I had done last year!

Also, I found on the website for the card that they do NOT charge penalties for paying off the account early.

Answer 1

That is correct. Let the lender know to apply it to the principle and not the interest. But I've come across some lenders that applied payments to the interest instead for some of my clients. The best way to assure your payment will be applied to the principle is to write "apply to principle only" or "principle payment only" in the memo section of your check. Because a check is a contract, the lender will have to apply the payment to the principle. If they don't, you'll have proof to show that's what you intended.

Answer 2

You can try enclosing a note AND calling them. I'm not sure if they will do this for you but if you are current on your account and have been they may work with you, Here is another tip that most people don't know about, call them and ask them if you can get a lower interest rate. My parents got into trouble with their card and I called to see if I could get their payment lowered and THEY offered a lower interest rate. The person at the credit card company told me they would rather lose some interest instead of the whole amount to bankruptcy. Hope this helps. Good Luck

Answer 3

You can't. Unless you make your minimum payment first and then make another payment later and then specify towards the principal and that's if they'll let you. Not everyone will. Why should they when they make more money on the interest.

Even if you do wind up paying on the interest as well, you'll still come out ahead.

Perhaps you should try to get a new card with a lower interest rate and transfer the balance.

Answer 4

The only way for them to apply it all to the principal is if you don't owe them interest. If you DO owe them interest, they will apply the payment towards it first, and the balance (if any), to the principal.

As a bonus, I'm giving you the link to an article I read on a finance blog. It's interesting and I think you should look at it:

http://financialbasics.blogspot.com/2006/11/use-your-credit-card-sensibly.html

Have a nice day!

Answer 5

You can't pay principal until all interest is paid unless you first negotiate with them. Best argument is to say you are planning to file bankruptcy. then negotiate to repay the principal without interest starting with your large payment. Threaten to use the large payment on a different debt.

Answer 6

This is how credit card companies make their money. By charging you interest. Unfortunately there is no way around this. And stay away from "credit counselors". They are also after your money and will do nothing to help you!

http://www.handlethetruth.net

Answer 7

Yes this is correct but if you owe them money for the interest, they'll apply it to the interest first anyway. That's their way of making money so this is why they are ready to offer so many credit cards to anyone!

Answer 8

you don't have to pay anything. 30% APR illegal. I believe in US USURY is 18%. You can not charge more than that. You can take that company to the court and get all over paid interest back.

May be you get lucky that in punitive damage your debt might be canceled.