not fer nuthin' but "paying more than the minimum" means next to nothing

[score_building]

This is not news but so many recent posts seem to hinge on this dubious distinction that it is high time to post a reminder that 'paying more than the minimum' does NOT necessarily protect one from much of anything, it depends on the actual numbers.

For eg., paying a minimum of 6% of outstanding balance can be a much more relevant way to gauge payment history record, as currently citibank for eg., will grade a payment of about 6% of outstanding balance as "very good" or "excellent" and grade down from there.   

In too many cases, just paying a little more than the minimum, may not be enough to get out of debt in a reasonable time frame and is not an effective way to contextualize debt/ payment...this type of thinking may in fact overexpose one to AA...better off using a yard stick the issuer may use in the current climate IMHO.

[laz98]

i agree, but in some cases, people need to experience it for themselves.  for instance, i didn't think it was a big deal that i didn't PIF, i just thought people were trying to be "holier than thou" on me.  i still can't afford to PIF, but now, i see the importance of getting my balances down ASAP, & not just revolving debt til the end of time.

[score_building]

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@laz98 wrote:
i agree, but in some cases, people need to experience it for themselves.  for instance, i didn't think it was a big deal that i didn't PIF, i just thought people were trying to be "holier than thou" on me.  i still can't afford to PIF, but now, i see the importance of getting my balances down ASAP, & not just revolving debt til the end of time.

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Yep.  I learned the hard way (by paying avoidable fees for years) and am still working to be debt free, I wish I had known about the value of PIF years ago, the Forums helped me see the light in that regard too

 

 

[haulingthescoreup]

One of the useful things that will happen with the Credit CARD Act (yes, there are a few!) is that every statement will have to display a table showing how long it will take you to pay off your balance if you only make minimum payments, and how much interest you will pay over the lifetime of the loan.

"Lifetime of the loan" --many of us don't think of credit card debt as a loan, but it most certainly is. You borrowed money from the CCC to buy something, and you have to pay it back, usually at interest rates that are way higher than typical installment loan rates.

You can pay it back the first month before the due date (or before the statement date, if you like to torture your FICO scores), or you can drag it out, paying interest and remaining beholden to the bank. I'm cheap, and I like to at least pretend I'm independent, so I'm a PIF'er.

[Anonymous]

is the 6% figure for Citibank an official policy they use? what about other issuers?

[keith021]

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@haulingthescoreup wrote:
One of the useful things that will happen with the Credit CARD Act (yes, there are a few!) is that every statement will have to display a table showing how long it will take you to pay off your balance if you only make minimum payments, and how much interest you will pay over the lifetime of the loan.

"Lifetime of the loan" --many of us don't think of credit card debt as a loan, but it most certainly is. You borrowed money from the CCC to buy something, and you have to pay it back, usually at interest rates that are way higher than typical installment loan rates.

You can pay it back the first month before the due date (or before the statement date, if you like to torture your FICO scores), or you can drag it out, paying interest and remaining beholden to the bank. I'm cheap, and I like to at least pretend I'm independent, so I'm a PIF'er.

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I did notice on my February Chase statement that there was an area that showed the estimated time of pay off including interest. How convenient.

[DI]

I haven't seen any new 'payoff tables' on my statements yet.  I imagine it won't appear if there's no balance reporting before the statement generates. 

[keith021]

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@DI wrote:
I haven't seen any new 'payoff tables' on my statements yet.  I imagine it won't appear if there's no balance reporting before the statement generates. 

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       Probably won't if there's no balance. Somehow a $52 balance did post and this is my first statement come to think of it.