topic Re: Can a credit card company charge more in interest that the min payment? in Credit Cards

Can a credit card company charge more in interest that the min payment?

Cleaningitup2016 — Sat, 16 Feb 2019 21:58:24 GMT

I am dealing with comenity, which seems kind of shady in the way they operate. My min due every month is $27.00. However the finance charges on the account run about $29.00 after reviewing my statements. I found out my balance is actually rising monthly because of this. I am trying to get out of debt but obviously don't have the extra money right now. Even I paid $20 more per month, it would take years to get the account current due to the interest.

Re: Can a credit card company charge more in interest that the min payment?

Remedios — Sat, 16 Feb 2019 22:02:50 GMT

That's how interest works and that's how lenders make their money.
Store cards are not meant for carrying balances as most APRs are outrageous.
Make every effort to pay it in full as soon as possible or it will get a lot worse.

If you can't pay it, maybe a BT would be an option if you qualify.

Good luck

Re: Can a credit card company charge more in interest that the min payment?

FinStar — Sat, 16 Feb 2019 22:03:20 GMT

Yes, it is perfectly legal. It also depends what your actual APR is and the average daily balance at the time your statement cycles.

Re: Can a credit card company charge more in interest that the min payment?

Cleaningitup2016 — Sat, 16 Feb 2019 22:06:48 GMT

But why would they calculate my min due at a rate that won't even make the balance the same or lower, but in fact higher?

I plan on paying it down, but the interest is dang near 30%.

I also like how it says on my statement "due to the way we calculated, you will never pay off the balance if you make only the mininum payment". I'm not making this up.

It seems rather predatory charging a lower payment than the finance charge.

Re: Can a credit card company charge more in interest that the min payment?

Cleaningitup2016 — Sat, 16 Feb 2019 22:08:24 GMT

Re: Can a credit card company charge more in interest that the min payment?

DU556 — Sat, 16 Feb 2019 22:11:23 GMT

WOW never heard of them saying that straight out.

Why don’t you consider citi simplicity with 21 month balance transfer option? 21 months can give you a very good amount of time to pay off much of the principal.

Re: Can a credit card company charge more in interest that the min payment?

Cleaningitup2016 — Sat, 16 Feb 2019 22:14:20 GMT

I don't have a good enough FICO for a prime card. I'm working on debt first.

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 22:15:48 GMT

@Cleaningitup2016 wrote:

Holy cow! I’ve never seen that.

If/when you can, make the minimum payment plus the interest charge at least. Then, pay that sucker off when you can.

Thats just crazy to me...

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 22:17:43 GMT

Most lenders make most of their money off interest payment. Thats just how it works.

When you get chance, try to pay them down faster.

Re: Can a credit card company charge more in interest that the min payment?

FinStar — Sat, 16 Feb 2019 22:17:44 GMT

@Cleaningitup2016they are actually compliant with the CARD Act requirements, which by law, governs not only the minimum payment disclosure, but also anything associated with the interest rate associated with the balance. Lenders have the discretion to determine (or adjust) the minimum payment amount as log as it meets the CARD Act requirements threshold.

As mentioned above, it likely would behoove you to see whether you can achieve paying the balance down by other means. Otherwise, you'll likely never PIF at this rate.

Re: Can a credit card company charge more in interest that the min payment?

Cleaningitup2016 — Sat, 16 Feb 2019 22:21:25 GMT

@Anonymous wrote:
@Cleaningitup2016 wrote:
Holy cow! I’ve never seen that.

If/when you can, make the minimum payment plus the interest charge at least. Then, pay that sucker off when you can.

Thats just crazy to me...

They seem to be taking advantage of the "just pay the mininum" crowd, which at least they are being upfront about it, lol.

Do you think there is anyway I can goodwill them for an intrest reduction?

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 22:44:47 GMT

@FinStar wrote:
@Cleaningitup2016they are actually compliant with the CARD Act requirements, which by law, governs not only the minimum payment disclosure, but also anything associated with the interest rate associated with the balance. Lenders have the discretion to determine (or adjust) the minimum payment amount as log as it meets the CARD Act requirements threshold.

As mentioned above, it likely would behoove you to see whether you can achieve paying the balance down by other means. Otherwise, you'll likely never PIF at this rate.

Right, from a US News article:

"An important element of the CARD Act, says Sherry, is to discourage credit card issuers from setting their minimum payments so low that borrowers incur negative amortization. If the minimum payment set by the credit card issuer results in negative amortization, that must be disclosed to the borrower. Negative amortization occurs when your balance on a debt grows because you haven't paid enough to cover the accrued interest."

So apparently here they weren't that discouraged, but clearly disclosed the negative amoritzation.

To be fair to our predatory lender friends: if there was an insistance that the minimum payment adjusted so that the loan would always be paid off in finite time, that might create concerns too. If I am going through a very rough patch, I might want to preserve my credit by making minimum payments, even if the amount owed actually goes up, in the hope that "soon" I can catch up. And I might not be able to make a "proper" min payment to avoid negative amorization.

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 22:49:44 GMT

I would rather know I need to eat ramen noodles for awhile up front than find out later that I’ve not been paying my balance down at all like OP did.

I hope you can get this sorted out OP, it’s a very unfortunate situation. I had no idea that Comenity minimum payments don’t pay down the balance, it’s the first time I’ve seen language like that on a card!

Re: Can a credit card company charge more in interest that the min payment?

Cleaningitup2016 — Sat, 16 Feb 2019 22:52:39 GMT

Does anyone know if it's possible to beg them to lower my interest? Even a 10% reduction would help.

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 23:11:38 GMT

@Cleaningitup2016 wrote:
Does anyone know if it's possible to beg them to lower my interest? Even a 10% reduction would help.

Comenity offers short term hardship repayment plans — but only after you’ve become delinquent.

Unfortunately the lenders have no desire to help you out and only will entertain the idea when it looks like they might not get their money.

You may wish to call a nonprofit credit counseling agency and see what your options are. Sometimes they can get you into a debt management plan with a lower payment due to greatly reduced interest.

https://www.consumer.ftc.gov/articles/0153-choosing-credit-counselor

Re: Can a credit card company charge more in interest that the min payment?

FinStar — Sat, 16 Feb 2019 23:10:26 GMT

While it's unlikely that they would, you could always ask them. Even if it's something temporary.

Re: Can a credit card company charge more in interest that the min payment?

FlaDude — Sat, 16 Feb 2019 23:26:36 GMT

@FinStar wrote:
While it's unlikely that they would, you could always ask them. Even if it's something temporary.

I would also expect they won't be of much help. My experience is that when I owed little or nothing on a card, calling to lower rates sometimes worked, but on cards that are maxed or close to it, they were very polite in how they essenttially told me to pound sand.

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 23:33:39 GMT

@Cleaningitup2016 wrote:
Does anyone know if it's possible to beg them to lower my interest? Even a 10% reduction would help.

I actually had great luck with Comenity Bank via my GameStop card. I worked out a hardship with them where they lowered my APR to around 6-6.5% for 12 months. This also locked the card so I could no longer use it until it was PIF (which I didn't mind). They also refunded all late fees that I had incurred over the past 6 months after making 3 successful on time payments with their program. The only other term and condition I had to meet was to not miss 3 payments for the length of the entire program, and not to miss 2 consecutively.

It's worth a shot. I'm sure Comenity has different TOS with each partner so as always YMMV.

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 23:46:29 GMT

@Cleaningitup2016 wrote:
@Anonymous wrote:
@Cleaningitup2016 wrote:
Holy cow! I’ve never seen that.

If/when you can, make the minimum payment plus the interest charge at least. Then, pay that sucker off when you can.

Thats just crazy to me...
They seem to be taking advantage of the "just pay the mininum" crowd, which at least they are being upfront about it, lol.

Do you think there is anyway I can goodwill them for an intrest reduction?

I wrote a letter to them trying to get them to reopen 2 accts that they closed, to no avail. I’ve read that “Goodwill” letters do work with Comenity. Though, I’m not sure what the success rate actually is. Mine and your situations are completely different, of course but, I think it’s worth a shot. You could call, too.

Surely anyone you talk to would look look at this and think, “wow that’s eff’d up.” Whether they help you or not is up to them.

Good luck! Let us know how it turns out.

Re: Can a credit card company charge more in interest that the min payment?

Anonymous — Sat, 16 Feb 2019 23:59:33 GMT

I actually just went back and checked my statements. I was wrong about the numbers. My original apr was 27.49, and the hardship apr was 10%. It also brought down my minimum payment due from $129 (it rose as my debt did) to $35 a month.

Edit: As far as GW goes, after I had the account completley paid off and closed I called and asked to have the only +30 day late that was on the account, and the guy deleted it immediately. He said it is a one time courtesy service they provide.