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How Credit Card Minimum Payments Are Calculated (By Issuer)

You know that each month your credit card company sends you a bill and that each month it requires a “minimum payment” you must make in order to avoid defaulting on the card loan. But how does the credit card company decide what your minimum payment should be?

There is no standard formula for calculating a minimum payment. Each card-issuing bank creates its own formula. Below are the minimum payment formulas for the major U.S. card issuers. For all card issuers, any past due amounts or amounts you’ve charged over your credit limit would also be added to the numbers below.

  • American Express: Minimum payment is always at least $35 (unless your balance is under $35, in which case you must pay the complete balance). However, if the amount of the following formula — (interest charges + 1% of current balance) — is over $35, that will be the method for determining your minimum payment.
  • Bank of America: Minimum payment is 1% of your balance plus any new interest charges for the month and any late fees (if applicable).

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Review: TJ Maxx Credit Card

The is officially known as the TJX Rewards Credit Card because it can be used at TJ Maxx as well as at Marshalls, HomeGoods, and Sierra Trading Post stores (all part of the TJX Companies, Inc., hence the card name). The card offers a decent rewards program for customers, but first a warning:

The TJ Maxx Credit Card has an interest rate of 27.49%!!! That’s really high!! If you don’t pay off your balance each month, you are going to pay lots of interest. If you carry even a $100 debt on the card for a whole year, you’ll end up paying over $25 extra on those purchases! Don’t get the card if you have a habit of carrying a balance!
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Review: NRA Credit Card

nra-credit-cardThe National Rifle Association (NRA), in partnership with First National Bank of Omaha, that support the NRA as well as offering various other features and rewards. Our overview / review of the NRA credit cards is below:

The first thing to mention about this card is that, while it does say it supports the NRA with each card purchase, no mention is made of what percentage of your purchases end up with the NRA. This may not bother you, but we thought you might like to know.
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Average Credit Card Rates – February 2017

average-card-rates225The current average credit card rate for the overall market is 19.01%, a significant jump from the 18.87% from last month, and the highest rate in the last three years. This abrupt jump was not totally unexpected, because many credit cards have rates that vary based on federal interest rates, and the Federal Reserve Board recently raised rates by a quarter-point. However, with the new year, some card companies also re-priced their cards even higher than just a quarter-point, so not all of the increases are due to the Fed’s policies.

Comparing current rates to the past, the average credit card rate at this time last year was 18.57%. Going back two years, the average rate in February of 2015 was 17.99%. As you can see, rates have inched up consistently, even before the recent rate hike caused a more significant bump.
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What is the difference between a secured credit card and an unsecured credit card?

bankamericard_securedIf you’ve ever received an offer in the mail for a secured credit card, you might wonder what that means. How is a secured credit card different from a “regular” credit card, and why would I want one?

Here’s the situation: Most credit cards on the market today are unsecured credit cards, what you would probably think of as “regular” credit cards. With an unsecured credit card, you charge your purchases to the card and in a month or so you get the bill for whatever you bought. You pay off the card, or, if you can’t afford to pay it off completely, you get charged interest on the balance that you left unpaid. If you continue to make your payments on time each month, the bank that issued the card continues to let you buy on credit, trusting that you will pay each month. The bank does not require you to put up any collateral against the temporary loan it is giving you; it is simply trusting you to keep paying. However, if you fail to pay you will hurt your credit rating and the bank may sue you.
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Review: Citibank Credit Cards

Below are short overviews / reviews of the most popular Citibank credit cards, also known as Citi credit cards or Citicards:

  • citi-diamond-preferredThe offers the lowest possible interest rate of any Citi card, at 12.49% (if you qualify, that is; note that you could be approved at a higher interest rate, as high as 22.49%). It also offers a 0% rate on purchases and balance transfers for 21 months, a very, very good deal. (Note that there’s a 3% fee on balance transfers.) Compare to: Lowest Interest Cards, Best Balance Transfer Cards
  • citi-simplicity-credit-cardThe is a standard low interest credit card with a bit of a twist — it doesn’t charge late payment fees and it doesn’t have a high default rate if you have too many late payments. It offers interest rates of 13.49% to 23.49% depending on your credit history, and it offers an introductory rate of 0% on purchases and balance transfers for a lengthy 21 months. (Note that there is a 3% fee on any balance transfers.) Compare to: Best Balance Transfer Credit Cards

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Review: Merrill Lynch Credit Cards

merrill-lynch-credit-cardMerrill Lynch, in partnership with its parent company Bank of America’s FIA Card Services, offers one personal and one business credit card that may appeal to Merrill customers. Our overview / review of each card is below:

  • The offers a standard points program — you earn 1 point per dollar and can use points toward travel, gift cards, cash, etc. In general, this card doesn’t stack up particularly well with other rewards or cash back credit cards. However, the Merrill web site does say that flights of up to $500 in value can be had for as little as 25,000 points, which means you could be redeeming your points at a value of 2 cents each, double what most reward points are worth. (Normally you would expect 25,000 points to be worth $250, so getting a $500 flight for 25,000 points is a good deal.) It is difficult to tell, though, whether your points have any greater value on other types of rewards. Overall this card seems fine but not necessarily a top choice.

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Do balance transfers earn points?

credit-card-handBeing the greedy credit card users we are, we not only want to transfer our card balances to a 0% credit card, we also want to get reward points or miles for the money we transfer over. But can we do that? Do you get points on balance transfers?

The answer is no. Well, actually the answer is rarely. Every so often you will see a limited-time offer to earn points on balance transfers, but as a rule the card companies do not make money on balance transfers, so you can’t expect they will give you points for them.
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Cruise Credit Cards

If you are a cruise fan — and there is definitely a cruise cult out there — you might be interested in one of the credit cards listed below.

The list includes credit cards offered direct from cruise lines as well as other credit cards offering special cruise rewards:

  • – Earn “FunPoints” that can be used toward future cruises or toward your onboard charges while cruising on a Carnival ship and sister cruise lines including Princess Cruises and Holland America. You get 2 points per dollar on purchases you make with the card on Carnival cruise purchases, and 1 point per dollar on all other purchases, plus at least 5,000 free points when you use the card for the first time. For reference, 1000 points is equivalent to $10. This card has no annual fee.
  • – Earn points toward future Holland America cruises or special rewards once on board Holland America ships, including a 5,000 point bonus (worth $50 in onboard purchases) just for getting and using the card for the first time. There is no annual fee with this card.

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Review: Staples Credit Cards

Office supply superstore Staples, in partnership with Citi, offers a number of personal and business credit cards with varying benefits. Our review / profile of each Staples credit card is below:

  • The obviously offers you the ability to stretch out payments instead of paying immediately, but it does offer a couple of other perks, one being that you are automatically upgraded to Premier Status in the Staples Rewards program, meaning you get a 5% rebate on all of your Staples purchases. You also get free shipping on all your Staples orders. However, the card has a 28.49% interest rate, which is ridiculously high — do not get this card if you have a habit of carrying balances, because the interest you pay will essentially cancel out the rewards you earn.

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