Re: NEED HELP PLZ!!!

Posted by Anon (164.106.127.145) on December 08, 2003 at 19:28:44:

In Reply to: NEED HELP PLZ!!! posted by scat131 on December 08, 2003 at 17:10:09:

It starts out simple. When they get the $25.00, they'll subtract it from your balance of $385, so now the balance to begin next month is $360. But by the end of the month they will have added one or more things to it.

First of course anything you purchase next month with the card will be added. The following assumes you don't use the card at all next month.

The next thing they'll definitely add is "FINANCE CHARGE" which Federal law requires them to always write in big letters. This is computed based on the Annual Percentage Rate (APR) of 14% in your case. Typically, the "FINANCE CHARGE" applied each month is based on taking Annual Percentage Rate (14% in your case), divide it by 365 to get a daily rate, and multiplying that by the balance each day. Then all the little daily finance charges are added to the balance at the end of the statement month.

This is rather complicated to do by hand, it's simpler to compute the approximate finance charge for a month by dividing the APR by 12, then multiplying that by the balance for the month. In your case it would be (.14 / 12 ) * $360 = $4.20. If there are no other fees, then your balance next month would be about $360 + $4.20 = $364.20.

Make sure to avoid the late fee and over the credit limit fee. If your credit limit isn't at least $400, be sure to pay enough to bring next month's *final* balance comfortably under the limit, or you'll be throwing away another $30 or so. If you incur the late fee or over limit fee after only paying $25, your balance will certainly go up next month, not down.

Many of the "subprime" cards add things monthly to the balance besides the basic finance charge, late fee, or over the limit fee. Look at the statement line by line and see if they are charging you anything else. You can assume these fees will recur in the same amount next month. Add them to $364.20 and that's approximately what the balance will be at the end of next month.

See if any of these other charges can be avoided. For example, "Payment Protection" is a worthless product that no one should buy. Other things like "Participation Fee" might be forgiven if you ask politely, but more likely you're stuck with them until you get a better card.

In some cases, the balance may go up next month. There is no requirement that paying the minimum payment make the balance go down, or avoid any fees other than the late fee. Always figure how much you really should pay to make a dent in the balance, it's going to be considerably more than the minimum payment.

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