Credit Card payment question?

Question

hello, i have my first credit card and am now on my third payment. my original credit was $500.00 and i spent it. so i paid the mini payment of 15. now the bank says because i paid mini payment, i owe 562.00 so when i pay the mini payment it does not take off th ebalance owed. so if i pay more than the mini payment, like 100.00 will it start paying the balance? so confused! help

Answer 1

If you maxed out that card and are only paying the minimum, you are probably over your limit and getting hit with that fee as well. Not only should you pay more than the mininum, you should pay as much as you can squeeze out of your budget till you get it all paid off.

Only charge what you can afford to pay at the end of the month. Don't pay interest and run up debt.

Answer 2

When you make a payment on your credit card, it applies to your account in the following manner:

1) Interest
2) Balance transfers (if any), (usually the one with the lowest interest rate is paid first, if that is not applicable, then the one expiring soonest will be paid first, depending on your credit card company)
4) Cash advances (if any), oldest to newest
5) Purchases, oldest to newest
6) Same as cash/Deferred transactions (soonest to expire is paid first)

So, depending on your interest charge and any additonal fees/insurances that are being added to your bill, only a small fraction of your minimum payment actually goes towards the principle.

For example, if your interest rate is 18.9% APR, you would have been charged roughly $8 in interest. If this put you over your $500 limit, your credit card company may have charged a fee, let's say $25. So your balance is now $533 ($500 + $8 [interest] + $25 [overlimit fee]). Then, if you have any other charges, like a montly fee for the account, or insurances/other coverages, those would also be added to that balance.

At the credit card company I worked for, we didn't charge an overlimit fee, but let's say we did charge $25. Our minimum payment requirement was 3% of your balance (at the time of the statement) plus any amount that is currently overlimit or past-due (whichever is more $). So, in this case, your balance is $533 - $33 over the limit. So you'd have to pay 3% of $533 ($16) plus the $33 overlimit, for a total of $49.

Now, because interest is paid first, $8 of your $49 automatically goes to that, then the remaining $41 goes to your balance, living you with a remaining principle of $484. Now, again, you will be charged interest and any additional fees the following month, which may again put you over your $500 limit, resulting in another overlimit fee of $25. It's a harsh, endless cycle.

The best thing you can do to alleviate the cycle, and also to boost your credit, is to make a payment that is larger than the minimum. It shows that you can handle a higher limit, and also will help you to pay your balance down much quicker. If you can afford it, pay more.

Answer 3

Payments are always applied to interest first. So the minimum payment you made went towards interest and obviously didn't even pay all the interest. It's always better to pay more than the minimum payment if your goal is to pay off the balance. Be careful they don't charge you an over limit fee if your limit was 500 and your balance is now 562 because of interest they may charge you an over limit fee.

You can make a payment anytime so I suggest you make a payment right now and at least get your balance back under the limit. Then pay as much as you can afford each month until it is paid off.

Answer 4

They are charging you for interests, so if you can pay 100 it will start paying the balance off. Usually if you double the minimum payment you will be good. The thing with credit cards is they make their money from the interest rate they charge you. Paying the minimum will just cost you more in the long run.

Answer 5

You have to pay MORE than the minimum balance or you will never get it paid off. When you pay the minimum balance all you are paying is the interest not the actual charges. If your minimum payment is $15 you should try to pay at least $25 if not more than that.

Answer 6

The interest is added to your balance every month. If you only pay the minimum, it may not ever cover the interest charges if you have a high interest rate. You need to pay enough to get the card down to below your max, and be careful to to exceed it again. If you do, you may be hit with over-limit fees. The hardest thing to do with a credit card is to NOT use it. To build a good credit history, avoid going over your limit, and always pay on time.

Answer 7

It does not matter, because you are not going to get the student credit card. Most student credit cards are only for students who already have other credit cards. If you applied for a student credit card to be your first credit card, then you will probably be rejected. When you do get your first credit card (which probably won't be a student credit card), you can pay the bill using your checking account, but not using your debit card. You do it online with the checking account number (not the debit card number) or you write an actual check on paper and mail it.

Answer 8

Just because you got a credit card of $500.00 limit does not mean you have to spend the whole $500.00..Credit Cards are for emergency's or when you really don't have the cash on hand but will have at least 1/2 the cash when your bill is due and the other half on the next bill cycle or something close to that..Yes you $15.00 went to the pockets of the Credit Card Presidents

Answer 9

Do you realize that interest will be added every month? If you only pay $15, you will never get it paid off. Better to pay it off as soon as possible! Look at how much the interest is.