The number of credit cards, one of the most important and frequently used banking products in our country, has exceeded 55 million. In this context, it is obvious that the steps to be taken regarding credit cards, which have an important place in the expenditures made in the economy, will be very large.
Within the framework of the economic program aimed at increasing savings by preventing over-borrowing, there has been a limitation in the minimum payment rates of credit cards in recent years. Accordingly, it will be useful to calculate the minimum payment of the credit card, what happens if the minimum payment is not made, and the derivative issues.
Credit Card Minimum Payment Rate
All credit card spending does not have to be paid on the next statement, and banks make it possible to include the remaining debt in the minimum payment rate of the next month if only part of the spending is paid.
The minimum payment amount of the credit card debt must be paid by the deadline. If the minimum payment is made instead of the term debt, the interest payment to be made for the amount remaining from the term debt is also postponed to the next month and therefore, the interest cost is continuously added.
The minimum payment rate will depend on the credit card limit. The higher the credit card limit, the higher the minimum payment amount will be to reduce the risk, in this respect:
- 30% for credit cards with a limit of up to 15 thousand USD,
- 35% for credit cards with a limit between 15 thousand USD and 20 thousand USD,
- For credit cards with a limit of more than 20 thousand USD, a minimum payment of 40 % is required.
For example, let’s assume that 1200 USD was spent with a credit card with a limit of 3000 USD. In this case, a minimum payment of 1 out of 1200 USD, ie 360 USD, will be requested. The consumer, who makes the minimum payment by paying 360 USD, will transfer the remaining 840 USD off the period debt together with the interest, and how much interest will be added to the next month depends on the agreement made with the bank.
If spending of 1200 USD is made with a credit card with a limit of 18 thousand USD, in this case, 35% of 1200 USD will be required to pay a minimum of 420 USD, and the remaining 780 USD will be transferred to the next month.
Consumers who have a credit card with a limit of 20 thousand USD and above will have to pay 40%, or 480 USD, for the 1200 USD spent. In this case, the remaining USD 720 debt will be transferred to the next month with interest.
The Easiest Way to Calculate
The easiest way to calculate the percentage is to divide the number multiplied by the percentage to the denominator later. In other words, it is the easiest way to reach a result by multiplying 30% of a curious number by 30 and dividing it by 100, 35% of the number asked by 35 by 100.
What happens if the minimum payment is not made
If the minimum payment is not made based on credit card debt, then it should also be subject to delay interest. The overdue interest is generally the highest interest rate set by the Central Bank and is indeed a very high rate compared to market conditions.
For the consumers who do not pay their debt for 3 months with the interest of delay, administrative follow-up begins in the second month, and legal follow-up is started after the third month. After legal proceedings, foreclosure can be applied to consumers who do not pay their debts and the credit card is closed and the consumer is blacklisted.
It is not possible for blacklisted consumers to use any banking product for 5 years.
Is It Bad To Pay Only At Minimum Rate?
Paying only the minimum amount of credit card debt is bad due to transferring the remaining period debt to the next month and paying unnecessary interest costs. If the minimum payment is not made, delay interest is applied, and if the minimum payment is made, contractual interest is applied for the period debt transferred to the next month.
The contractual interest rate is lower than the delay interest, but it is still determined by the Central Bank at a rate above the market average.
It is possible for interest payments to reach a serious extent after a minimum of payment every month, while the credit card limit may not be enough for the expenditures to be made and applications can be made for a higher limit. Therefore, in order not to enter this vicious circle, it would be good to try to close all of the period debt and to close all debts as soon as possible.
Contrary to popular belief, only minimal payments do not have a negative effect on the credit rating. Only the amount of credit that can be withdrawn due to the presence of credit card debt will be low, but the credit will increase again due to the closure of the debt.