Does the interest percentage on credit card banking have anything to do with the price of the minimum payment?
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Nomi_Omi23
1 year ago
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
no
lenders are free to set rates and charges at any level and even when they were challenged as unfair by the OFT in a "super complaint" the banks won!
banks/card companies will set their rates at a level to both attract new customers and to heavily penalise those that default.
a crafty act by many has been to reduce the minimum payment levels, in the past 3-5% was the norm but now there are cards requiring as little as 1% as a monthly minimum payment, how on earth you ever pay back the capital when the interest rates on cards are typically 18% is beyond me!
they are almost like signing up to a lifetime of debt that hardly ever changes nomatter how much you pay "the minimum"
at least now, card providers have to allocate your payments to the most expensive debt first, it wouldnt surprise many to know that often they would clear the 0% promotional balance whilst charging you 18% on your new purchases.
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lenders are free to set rates and charges at any level and even when they were challenged as unfair by the OFT in a "super complaint" the banks won!
banks/card companies will set their rates at a level to both attract new customers and to heavily penalise those that default.
a crafty act by many has been to reduce the minimum payment levels, in the past 3-5% was the norm but now there are cards requiring as little as 1% as a monthly minimum payment, how on earth you ever pay back the capital when the interest rates on cards are typically 18% is beyond me!
they are almost like signing up to a lifetime of debt that hardly ever changes nomatter how much you pay "the minimum"
at least now, card providers have to allocate your payments to the most expensive debt first, it wouldnt surprise many to know that often they would clear the 0% promotional balance whilst charging you 18% on your new purchases.
