Can someone help me with my math?

**FrugalMomof3** · 05-16-2008, 05:04 PM

Ok I want to know what the minimum payment on a credit card would be if the balance is $4000, using the following methods as told to me by my credit card company:

The minimum due calculation begins with any amount that is past due plus any amount in excess of your credit line. Then the greater of the following is also added:

- The new statement balance if it is less than $20; or
- $20 of the new balance if it is at least $20; or
- 1% of the new balance plus the amount of billed finance charges plus any applicable late fees or
- 1% of the new balance plus the amount of billed finance charges or
- 1.5% of the new outstanding balance, rounded down to the nearest dollar.

I have not used this card, therefore I have no balance but if I charged $4000, I want to know what my min. payment would be, anyone care to help?

**Dancing Lotus** · 05-16-2008, 05:10 PM

this sounds like a job for my dh.... if you don't get an answer I will ask him when her gets home.

**FrugalMomof3** · 05-16-2008, 05:15 PM

I think I found out on bankrate but wouldnt mind other's input.

- 1% of the new balance plus the amount of billed finance charges = $79.60
- 1.5% of the new outstanding balance, rounded down to the nearest dollar. = $60

Is that right?

**mommy4ever** · 05-16-2008, 05:29 PM

that sounds so complicated! LOL

I was told by mine(had to ask), that is 3% of the balance or $60 whichever is more. (if balance is less that $60, then the balance obviously)

**mikandmari** · 05-18-2008, 08:06 PM

$79.60 is greater than $60, so it sounds like it would be $79.60.

Most credit cards set the minimum payment at 2.5%, which means $25 per thousand, and doesn't factor in your finance charges or late fees, but does add any late payments due or amounts over the credit limit.

The minimum payment you describe sounds more like a personal line of credit, or a home equity line of credit. For that, I could calculate the payment if I knew the interest rate. Of course, if the rate is variable it could change each month. From the minimum payment you have calculated, I can estimate that you're paying 11.99%. Is that right?

This is how it's done...

1% is $10 per thousand, so that would be $40 for the $4000 balance.

To calculate the finance charge:
1. Take the annual interest rate of 11.99 and divide it by 12 (months) (11.99 ÷ 12 = .99). This is your monthly interest rate.

2. Figure the average daily balance by adding your balance for each day of the billing cycle and dividing by the number of days in that cycle. The 2nd month may look like this:

10 days at $4039.60 ($4000 + 39.60 finance charge) = 40396.00
20 days at $3960.00 (after your payment of $79.60) = 79200.00

40396.00 + 79200.00 = 119,596.00
and 119,596.00 ÷ 30 days = $3986 would be your average daily balance or ADB

So, $3986.00 x .99% = 39.46 finance charge for the 2nd month, plus 1% of 39.00, means the 2nd month minimum payment would be $78.46.

I don't why my kids think I'm a dork

**Frugal Nurse** · 05-18-2008, 09:39 PM

Tracy, we don't know what your interest rate is- therefore can not calculate the minimum payment.

But I do know this. Your first month's minimum due would be $40.00 which is 1% of $4000. At least for the first month or so... you have a grace period on the finance charges (i.e. if you pay it in full- you owe no finance/interest fees).

Lets say your interest rate is 13% then your second payment would be about $80 (like you said).

And...I think your total cost to pay off $4000 using the minimum payment is like ... $22,000 or so and it will take you an outragious 30 years to do it.

Now, I must ask you. Do you REALLY want to do that?

**FrugalMomof3** · 05-19-2008, 07:45 AM

My interest rate is 11.99% as mentioned in my first post. As for paying it off in 30 years, HECK NO! I would most likely double the min. payment + put extra too whenever I can, just wanted to know the min. payment before I went ahead and regretted charging $4000 to it.

**FrugalMomof3** · 05-19-2008, 07:46 AM

Sorry about that, I thought I put in my interest rate in my first post, silly me

but it is 11.99%

**Frugal Nurse** · 05-19-2008, 08:57 AM

Traceeeeeeeeeeeee

Come on!! can I talk you out of it?

How about this... save up the $$.
Sell some things.

Don't charge it.
No!!!!

Well... first, is it something that you need. Something that you will benefit from? something that you could do without?

Care to share?

**FrugalMomof3** · 05-19-2008, 09:10 AM

Well its something I would HAVE to do butI am trying to get the amount lowered to $2000, BUT right this second it's not a necessity but in a few minutes... ok days/weeks it will be. It's a down payment for something that's all I can say right now.

AND I might have already got talked out of it by my 12 yr. old DD.

**mombottoo** · 05-20-2008, 11:00 AM

Why don't you call your CC company and ask them what your minimum payment would be? I would also like to try to talk you out of charging that kind of money on your CC...I know sometimes things happen that make it necessary, but $4,000 at 11.99% interest isn't a deal. If you need to borrow money have you considered taking out a personal loan at a lower rate?