To those smug individuals asking if I am smarter than a subprime borrower, then I have a subprime math question for you.
Your minimum credit card payment is $113. The distribution of the payment was $60.24 interest. Show that as a fraction (60.24/113) Then solve for percentage (60.24 divided by 113 =). If you only make the minimum payment, then 53.3% is interest you pay to the bank and 46.7% actually reduces the balance owed.
On a basic savings account, the interest rate paid is .24%. If you deposit $100 for a year, how much will the bank pay you? (The bank will pay TWENTY FOUR CENTS.) A one time reduction of $100 on your credit card balance, will save the interest rate percentage charged over one year. At 13.24% interest APR you will NOT pay the bank $13.24 over 12 months. At 29.99% interest you will NOT pay the bank $29.99. If you double the $100 payment, then the amount you do NOT pay the bank in interest will also double.
I will pay more than the minimum payment and attempt to make every dollar I spend more productive. Every dollar I save in interest is money I have NOT Paid some bank or rich executive.
Hi, I'm Jen and I'm here to help. Submit your complaint here or get help here
This article, Subprime Credit Card Math, is just one of our articles from our Mortgage Crisis Daily
The Subprime Mortgage Crisis Before, During, and After
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