topic Re: NFCU New Minimum Payment policy in Credit Cards

NFCU New Minimum Payment policy

pcmedic2k — Tue, 17 Jan 2023 22:07:02 GMT

Just received the following for all three of my Navy Fed cards so assuming it will apply to all of their cards. "Changes Coming to Your Credit Card Agreement If there are any problems with how this content is displayed, please view it in your web browser. RE: Credit card ending in xxxx Thanks for choosing us for your financial needs. Effective March 31, 2023, your xxxxxxxx Credit Card Agreement and Disclosure ("Agreement") will be changed as follows: • Minimum Payment Due: We're changing how we calculate your Minimum Payment Due. Currently, it's any past due amount plus the greater of 2% of your new balance or $20. On the effective date, this will change to any past due amount plus the greater of $20 or the sum of 1% of your new balance plus interest and fees. This change will affect your Minimum Payment Due amount. • Transaction Categories: We're clarifying how transactions are categorized by adding definitions for each. As a result, cash-like transactions, such as gambling-related purchases and cryptocurrency purchases, will be considered cash advances and subject to the cash advance APR. • Notice of Claim: We're adding a term that provides steps to follow before commencing or joining judicial actions to resolve disputes related to this Agreement. • General Formatting: We made formatting changes to your agreement. For example, we removed paragraph numbers and made the font size bigger. Additional information about changes to your account is provided below. 1. We're updating your Payments section's Minimum Payment Due paragraph as follows: Minimum Payment Due. Your monthly statement will tell you: the total amount you owe us, including interest and fees charged during the billing cycle; the minimum payment that you must make; and your payment due date. (1) If your New Balance is less than $20, your Minimum Payment Due will be: o Your New Balance (which includes any Past Due Amount) (2) If your New Balance is at least $20, your Minimum Payment Due will be any Past Due Amount, PLUS the greater of: • $20 OR • 1% of your New Balance (excluding interest and fees charged during the billing cycle) rounded up to the nearest whole dollar; PLUS interest and fees charged during the billing cycle. Your Minimum Payment Due will never be more than your New Balance. You may pay the New Balance in whole or in part any time. You may pay more than the Minimum Payment Due, up to the amount of your New Balance. 2. We're defining transaction categories as follows: a) Purchase. A transaction to buy or lease goods or services. Balance Transfers, Cash Advances, and Convenience Checks are not Purchases. Fees are categorized as Purchases on your periodic statement and are included in your Purchases balance. b) Balance Transfer. A transfer of a balance from another creditor (i.e., not Navy Federal) to your account. c) Cash Advance. A transaction to get cash, deposit funds, or purchase cash-like items or services. Cash-like items or services include items that are identified as money orders, wire transfers, traveler checks, foreign currency, cryptocurrency or similar digital currency, lottery tickets, gaming chips, off-track wagers, offline and online betting transactions or other methods of gambling, and other similar items. d) Convenience Check. A check provided by us to access credit from your account. Additional terms and conditions apply. 3. We're adding a Notice of Claim paragraph as follows: Notice of Claim. Neither you nor Navy Federal may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party's actions pursuant to this Agreement or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Agreement, until such party has notified the other party of such alleged breach and afforded the other party a reasonable period after the giving of such notice to take corrective action. For a copy of the updated pages of your agreement, please visit navyfederal.org/nfccad_2023. If you have questions about this notice, call us toll-free any time at 1-888-842-6328 or contact us through our online banking at navyfederal.org. You can also write to: Navy Federal Credit Union P.O. Box 3501 Merrifield, VA 22119-3501"

Re: NFCU New Minimum Payment policy

FireMedic1 — Tue, 17 Jan 2023 23:29:53 GMT

Hello @pcmedic2k

Could you click the three dots top right of your post. Click edit and add some paragrahs please? Hard to read. Tx.

Re: NFCU New Minimum Payment policy

Anonymous — Wed, 18 Jan 2023 00:18:07 GMT

@pcmedic2k wrote:
Just received the following for all three of my Navy Fed cards so assuming it will apply to all of their cards.

"Changes Coming to Your Credit Card Agreement
If there are any problems with how this content is displayed, please view it in your web browser.

RE: Credit card ending in xxxx

Thanks for choosing us for your financial needs. Effective March 31, 2023, your xxxxxxxx Credit Card Agreement and Disclosure ("Agreement") will be changed as follows:

• Minimum Payment Due: We're changing how we calculate your Minimum Payment Due. Currently, it's any past due amount plus the greater of 2% of your new balance or $20. On the effective date, this will change to any past due amount plus the greater of $20 or the sum of 1% of your new balance plus interest and fees. This change will affect your Minimum Payment Due amount.

• Transaction Categories: We're clarifying how transactions are categorized by adding definitions for each. As a result, cash-like transactions, such as gambling-related purchases and cryptocurrency purchases, will be considered cash advances and subject to the cash advance APR.

• Notice of Claim: We're adding a term that provides steps to follow before commencing or joining judicial actions to resolve disputes related to this Agreement.

• General Formatting: We made formatting changes to your agreement. For example, we removed paragraph numbers and made the font size bigger.

Additional information about changes to your account is provided below.
1. We're updating your Payments section's Minimum Payment Due paragraph as follows:

Minimum Payment Due. Your monthly statement will tell you: the total amount you owe us, including interest and fees charged during the billing cycle; the minimum payment that you must make; and your payment due date.
(1) If your New Balance is less than $20, your Minimum Payment Due will be:
o Your New Balance (which includes any Past Due Amount)
(2) If your New Balance is at least $20, your Minimum Payment Due will be any Past Due Amount, PLUS the greater of:
• $20 OR
• 1% of your New Balance (excluding interest and fees charged during the billing cycle) rounded up to the nearest whole dollar;
PLUS interest and fees charged during the billing cycle.

Your Minimum Payment Due will never be more than your New Balance. You may pay the New Balance in whole or in part any time. You may pay more than the Minimum Payment Due, up to the amount of your New Balance.

2. We're defining transaction categories as follows:
a) Purchase. A transaction to buy or lease goods or services. Balance Transfers, Cash Advances, and Convenience Checks are not Purchases. Fees are categorized as Purchases on your periodic statement and are included in your Purchases balance.
b) Balance Transfer. A transfer of a balance from another creditor (i.e., not Navy Federal) to your account.
c) Cash Advance. A transaction to get cash, deposit funds, or purchase cash-like items or services. Cash-like items or services include items that are identified as money orders, wire transfers, traveler checks, foreign currency, cryptocurrency or similar digital currency, lottery tickets, gaming chips, off-track wagers, offline and online betting transactions or other methods of gambling, and other similar items.
d) Convenience Check. A check provided by us to access credit from your account. Additional terms and conditions apply.

3. We're adding a Notice of Claim paragraph as follows: Notice of Claim. Neither you nor Navy Federal may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party's actions pursuant to this Agreement or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Agreement, until such party has notified the other party of such alleged breach and afforded the other party a reasonable period after the giving of such notice to take corrective action.

For a copy of the updated pages of your agreement, please visit navyfederal.org/nfccad_2023. If you have questions about this notice, call us toll-free any time at 1-888-842-6328 or contact us through our online banking at navyfederal.org. You can also write to: Navy Federal Credit Union P.O. Box 3501 Merrifield, VA 22119-3501"

Re: NFCU New Minimum Payment policy

nbnsraz — Wed, 18 Jan 2023 00:55:17 GMT

Seems like pretty standard stuff to me. Nothing in those terms strikes me as any significant change, if any at all. Haven't really paid the minimum on a credit card in a long time, but there used to be funny rules around minimum payments.

Years ago, you could have a pay ahead option where if you made a large payment, banks might have a $0 minimum due for a few months. Also, credit unions and some retail banks would regularly let you skip a payment once a year. It's only really because of reforms, once they realized some consumers never were able to reduce their balances that they started requiring reasonable minimum payments (2% or 1% plus interest/fees) to prevent balances from growing or never coming down.

Silly anecdotal information!

Re: NFCU New Minimum Payment policy

OmarGB9 — Wed, 18 Jan 2023 01:02:10 GMT

@Anonymous wrote:
@pcmedic2k wrote:
Just received the following for all three of my Navy Fed cards so assuming it will apply to all of their cards.

"Changes Coming to Your Credit Card Agreement
If there are any problems with how this content is displayed, please view it in your web browser.

RE: Credit card ending in xxxx

Thanks for choosing us for your financial needs. Effective March 31, 2023, your xxxxxxxx Credit Card Agreement and Disclosure ("Agreement") will be changed as follows:

• Minimum Payment Due: We're changing how we calculate your Minimum Payment Due. Currently, it's any past due amount plus the greater of 2% of your new balance or $20. On the effective date, this will change to any past due amount plus the greater of $20 or the sum of 1% of your new balance plus interest and fees. This change will affect your Minimum Payment Due amount.

• Transaction Categories: We're clarifying how transactions are categorized by adding definitions for each. As a result, cash-like transactions, such as gambling-related purchases and cryptocurrency purchases, will be considered cash advances and subject to the cash advance APR.

• Notice of Claim: We're adding a term that provides steps to follow before commencing or joining judicial actions to resolve disputes related to this Agreement.

• General Formatting: We made formatting changes to your agreement. For example, we removed paragraph numbers and made the font size bigger.

Additional information about changes to your account is provided below.
1. We're updating your Payments section's Minimum Payment Due paragraph as follows:

Minimum Payment Due. Your monthly statement will tell you: the total amount you owe us, including interest and fees charged during the billing cycle; the minimum payment that you must make; and your payment due date.
(1) If your New Balance is less than $20, your Minimum Payment Due will be:
o Your New Balance (which includes any Past Due Amount)
(2) If your New Balance is at least $20, your Minimum Payment Due will be any Past Due Amount, PLUS the greater of:
• $20 OR
• 1% of your New Balance (excluding interest and fees charged during the billing cycle) rounded up to the nearest whole dollar;
PLUS interest and fees charged during the billing cycle.

Your Minimum Payment Due will never be more than your New Balance. You may pay the New Balance in whole or in part any time. You may pay more than the Minimum Payment Due, up to the amount of your New Balance.

2. We're defining transaction categories as follows:
a) Purchase. A transaction to buy or lease goods or services. Balance Transfers, Cash Advances, and Convenience Checks are not Purchases. Fees are categorized as Purchases on your periodic statement and are included in your Purchases balance.
b) Balance Transfer. A transfer of a balance from another creditor (i.e., not Navy Federal) to your account.
c) Cash Advance. A transaction to get cash, deposit funds, or purchase cash-like items or services. Cash-like items or services include items that are identified as money orders, wire transfers, traveler checks, foreign currency, cryptocurrency or similar digital currency, lottery tickets, gaming chips, off-track wagers, offline and online betting transactions or other methods of gambling, and other similar items.
d) Convenience Check. A check provided by us to access credit from your account. Additional terms and conditions apply.

3. We're adding a Notice of Claim paragraph as follows: Notice of Claim. Neither you nor Navy Federal may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party's actions pursuant to this Agreement or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Agreement, until such party has notified the other party of such alleged breach and afforded the other party a reasonable period after the giving of such notice to take corrective action.

For a copy of the updated pages of your agreement, please visit navyfederal.org/nfccad_2023. If you have questions about this notice, call us toll-free any time at 1-888-842-6328 or contact us through our online banking at navyfederal.org. You can also write to: Navy Federal Credit Union P.O. Box 3501 Merrifield, VA 22119-3501"

Not all heroes wear capes. Thank you sir.

Re: NFCU New Minimum Payment policy

Shooting-For-800 — Wed, 18 Jan 2023 03:43:08 GMT

So it goes from like 2% to 2.5 or 3%?

Re: NFCU New Minimum Payment policy

ZSR — Wed, 18 Jan 2023 04:02:28 GMT

So how is this going to affect minimum payments? Are they going to decrease or go up? It's slightly confusing on how they word this. For instance-- if you have a cc and owe $20k on it. Is your new minimum payment $200/ mo or $200/mo + 15% interest on that amount owed? I called and spoke with a rep today but she didn't seem certain on the info she gave me. She did say this was so people were paying less interest and more towards the principle. Not sure how that makes sense since they aren't adjusting the actual interest rate. I wish they had a calculator for this. Any info is appreciated.

Re: NFCU New Minimum Payment policy

805orbust — Wed, 18 Jan 2023 05:46:53 GMT

I would automatically assume it's going up because.... banks. I'm dizzy reading that. 🤣

Re: NFCU New Minimum Payment policy

Citylights18 — Wed, 18 Jan 2023 07:06:44 GMT

@ZSR wrote:
So how is this going to affect minimum payments? Are they going to decrease or go up? It's slightly confusing on how they word this. For instance-- if you have a cc and owe $20k on it. Is your new minimum payment $200/ mo or $200/mo + 15% interest on that amount owed? I called and spoke with a rep today but she didn't seem certain on the info she gave me. She did say this was so people were paying less interest and more towards the principle. Not sure how that makes sense since they aren't adjusting the actual interest rate. I wish they had a calculator for this. Any info is appreciated.

I went through my old statements and an interest calculator to see if there was any truth in the concept of dropping the minimum from 2% to 1% was going to have a bearing on whether you actually paid less interest.

Unfortunately the interest you pay is set by the terms at the bottom of your statement (e.g. the interest rate of various promotions on your account). Multiply the balance of the promotion by the APY interest rate listed and divide by 12. That will be your interest to pay for that promotional balance. However at 1% your monthly payment will be a lot lower so while you are paying the same interest the princpal required for the payoff is a lot lower.

A balance of 50,000 will then be a monthly payment of $500 as opposed to $1000 and I generally view that as a good thing. If you make an extra payment before the statement cuts of $500 or more in this case then you don't owe a minimum monthly payment when the statement arrives. This can help you skip payments allowing you to save more money to make even bigger payments in the future. If you want to take the all zero approach 1% will help you snowball more quickly. Personally I paid 73,000 off this card all at 2% minimum balance payment and 1% could have helped out.

Re: NFCU New Minimum Payment policy

SouthJamaica — Wed, 18 Jan 2023 16:34:01 GMT

The way I read the change in minimum payment is this; it makes no difference except to people who significantly pay down an interest-accruing balance in the prior month. Here's why:

If you're not carrying any balances, and not using cash advances or interest-accruing balance transfers, the size of the minimum payment is drastically reduced. However, if you're not carrying any balances, it doesn't really matter to you, since you never pay just the minimum payment, you are always paying in full.

If you are carrying balances, and/or using cash advances or interest-accruing balance transfers, then the size of the minimum payment willl be about the same unless you significantly reduce your interest-accruing balance during the prior month. E.g., A has the platinum card, statement balance was $5k, account was paid down to zero 2 weeks after statement, interest charged was $25, minimum payment is $75, whereas it would have been $100 under previous rule. B has the platinum card, statement balance was $5k, B paid $100 towards the balance on the due date, leaving balance of $4900, interest charged 49.50, minimum payment of $99.50... i.e. 50 cents less than it would have been under the prior minimum payment term.

Re: NFCU New Minimum Payment policy

Citylights18 — Wed, 18 Jan 2023 17:33:50 GMT

No. When an issuer is talking about your minimum payment is 2% or 1.5% or 1% balance that means if you have 50,000 on that revolving line that is a difference between $1000, $750 or $500 that you are obligated to have to pay. That does make a difference as far as cash flow is concerned.

It does make sense for people to take on productive debt which is what a mortgage is by leveraging their income. Buying stuff sooner rather than later saves on inflation costs while you are physically able too compared to a time when you are not. You've got to manage the payments effectively though. Know when to go with credit and when to take a loan. That is another problem is people take out outsized 50,000 or 100,000 notes with high payments that don't go down as you pay them off. Very few are skilled with using debt effectively outside of property secured debt (mortgage/HELOCs).

Re: NFCU New Minimum Payment policy

Brian_Earl_Spilner — Wed, 18 Jan 2023 17:51:54 GMT

Seems people are making this way more complicated than it needs to be. Bottom line is the portion of balance due every month is cut in half.

For those that live paycheck to paycheck, this frees up more money for them.

For those able to continue making the current minimum payment, they'll pay down the balance faster due to paying less interest.

For everyone else, it's a moot point because the 1% doesn't affect your current payment routine.

Re: NFCU New Minimum Payment policy

SouthJamaica — Wed, 18 Jan 2023 22:29:29 GMT

@Brian_Earl_Spilner wrote:
Seems people are making this way more complicated than it needs to be. Bottom line is the portion of balance due every month is cut in half.

For those that live paycheck to paycheck, this frees up more money for them.

For those able to continue making the current minimum payment, they'll pay down the balance faster due to paying less interest.

For everyone else, it's a moot point because the 1% doesn't affect your current payment routine.

Not so. If you're accruing interest charges, the new interest is added to the minimum payment.

Re: NFCU New Minimum Payment policy

Brian_Earl_Spilner — Wed, 18 Jan 2023 22:54:00 GMT

@SouthJamaica wrote:
@Brian_Earl_Spilner wrote:
Seems people are making this way more complicated than it needs to be. Bottom line is the portion of balance due every month is cut in half.

For those that live paycheck to paycheck, this frees up more money for them.

For those able to continue making the current minimum payment, they'll pay down the balance faster due to paying less interest.

For everyone else, it's a moot point because the 1% doesn't affect your current payment routine.
Not so. If you're accruing interest charges, the new interest is added to the minimum payment.

I said balance, I didn't mention fees or interest. 2% of the balance is now 1% of the balance. The amount of the balance due is cut in half. Add on interest and fees for the minimum payment.

Re: NFCU New Minimum Payment policy

Anonymous — Wed, 18 Jan 2023 23:03:26 GMT

@Brian_Earl_Spilner wrote:
@SouthJamaica wrote:
@Brian_Earl_Spilner wrote:
Seems people are making this way more complicated than it needs to be. Bottom line is the portion of balance due every month is cut in half.

For those that live paycheck to paycheck, this frees up more money for them.

For those able to continue making the current minimum payment, they'll pay down the balance faster due to paying less interest.

For everyone else, it's a moot point because the 1% doesn't affect your current payment routine.
Not so. If you're accruing interest charges, the new interest is added to the minimum payment.
I said balance, I didn't mention fees or interest. 2% of the balance is now 1% of the balance. The amount of the balance due is cut in half. Add on interest and fees for the minimum payment.

No, because "balance" means different things. In the old system, it was just as it suggests, the bottom line figure on the statement. In the new system you subtract out this month's interest charges, pay 1% of what remains, and then pay the interest charges. In some cases, the new minimum payment could be greater than the old one

Re: NFCU New Minimum Payment policy

Anonymous — Wed, 18 Jan 2023 23:04:47 GMT

A little off topic, but is the Notice of Claims unusual too? I don't remember seeing that from other issuers, and what is a reasonable time for things to be resolved? Seems too vague to stand up to legal challenge (but IANAL)

Changes to Navy Federal Payments

ambivalent — Thu, 02 Feb 2023 16:39:56 GMT

Hi All, Happy 2023!

I received an email from NFCU stating there were changes coming to the CC agreement. Currently, it is any amount past due plus the greater of 2% of the new balance or $20. The new payment is (if your new balance is at least $20), any past due amount plus the greater of $20, or 1% of your new balance (excluding interest and fees charged during the billing cycle) PLUS interest and fees charged during the billing cycle.

How does this affect the minimum payment? Does this mean it is going up? I don't have a CC balance with them right now, but DH does.

I searched the forum, so if there is a discussion on this, if you could kindly point me in that direction, that would be great. Thanks!

Re: Changes to Navy Federal Payments

Kforce — Thu, 02 Feb 2023 16:58:17 GMT

Moved as I was typing

Re: Changes to Navy Federal Payments

ambivalent — Thu, 02 Feb 2023 17:06:52 GMT

Thanks for moving! I knew it had to be on here somewhere, but I couldn't find it for whatever reason in the search.

Re: Changes to Navy Federal Payments

K-in-Boston — Thu, 02 Feb 2023 17:10:58 GMT

In a more perfect world, searches for Navy Federal would also show results for NFCU.