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naomibatac's avatar

Credit card interest computation on minimum payments?

Asked by naomibatac (43points) August 16th, 2011
2 responses
“Great Question” (0points)

When paying credit cards and settling only the minimum amount due, have you observed that the payment is mostly applied to interest and charges. How did they compute the interest related to the payment on the minimum amount due?

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Answers

Adirondackwannabe's avatar

Without knowing which card you’re referring to I’m guessing they use the 30/360 method. Find the APR and multiply that by the principal balance. Divide that number by 360 to come up with the daily interest charge, or the per diem. Multiply that by 30 to come up with the monthly interest charge.

shirleylopez's avatar

Thanks @adirondackwannabe for the reply. BTW, I am referring to VISA.

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