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Amortization question - 7/20/2009 3:00:51 PM

Termyn8or

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Joined: 11/12/2005
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For the avid number crunchers. I used to have a calculator for this but I don't think it could do what I ask now. Can't find it anyway because of reloading the OS.

I remember buying something for $20K and principal and interest were a hair under $200 a month. this was on a fifteen year term at 10.2%. Now I have this credit card with a big balance. What I have heard is that if you make the minimum payments the amortization is a very long time, I have heard they use anywhere from 34.5-50 years or so, or they used to.

The question here is; is the bank screwing me (anymore than usual that is) ? I have a card with a balance of about $26K on it and the minimum payment is $458 per month. This is at 8.65% interest which is fantastic for a credit card, but is it ? My calculator wouldn't allow me to put in all the other parameters and figure out the length of the term.

So now, does the bank want their money more quickly or are they using some fuzzy math to bilk me ? I have heard of double dipping, and while I don't completely understand it, I know that if your bill is calculated that way you are paying almost double the stated interest rate.

Maybe the math is simpler than I think, i.e. that I am missing something. One of the main problems is that even though I try to use the card as little as possible, I still use it. Therefore a comparison between previous balance and current balance is not quite an accurate indicator. I'm just not quite sure how to figure this out.

Here are the crunchables :

Payment : $458.58 (they really need that fifty eight cents now I bet)
New balance : $26,104.25
Purchases and advances : $425.55 (rough month with moving and remodeling)
Within purchases and advances is :
Periodic Rate bla bla bla : $197.58

The question is how bad am I getting screwed ? I have the option to stop using the card and just pay it down. However I tend to use it because it is the lowest STATED rate card I have. So if anyone knows or has a way to figure it out, how long should a $26,000 loan take to amortize at 8.65% with a payment of $450 ? (rounder figures) I get a figure of about $187 monthly interest, but what of that other loan ? It just doesn't seem to add up.

T

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RE: Amortization question - 7/20/2009 3:48:35 PM

MistressRoxie

Posts: 13
Joined: 1/24/2009
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Well, I can tell you roughly that you're looking at 6 -7 years to pay back the balance, assuming that you make only the minimum payment and DON'T use the card while you're trying to pay it off.

Consider this, you're paying $458.58 per month, but accruing the 197.58 in interest and charging another 425.55, so you're increasing the balance and not getting any closer to paying it off.

This might get a little cloudy, but as you pay down the balance, your periodic rate will decrease, so as you pay it down, you're paying more money towards the balance of the "loan" and less in interest. Now, these are really rough figures, but again, assuming you don't use the card anymore, you'll pay about $9000 in interest by the time you pay the balance off.

If you can pay it off faster, by making more than the minimum payment, then you'll save yourself interest.

If you have any other questions, feel free to message me on the other side.

Miss Roxie

(in reply to Termyn8or)

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RE: Amortization question - 7/20/2009 3:51:18 PM

LookieNoNookie

Posts: 12216
Joined: 8/9/2008
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quote:

ORIGINAL: Termyn8or

For the avid number crunchers. I used to have a calculator for this but I don't think it could do what I ask now. Can't find it anyway because of reloading the OS.

I remember buying something for $20K and principal and interest were a hair under $200 a month. this was on a fifteen year term at 10.2%. Now I have this credit card with a big balance. What I have heard is that if you make the minimum payments the amortization is a very long time, I have heard they use anywhere from 34.5-50 years or so, or they used to.

The question here is; is the bank screwing me (anymore than usual that is) ? I have a card with a balance of about $26K on it and the minimum payment is $458 per month. This is at 8.65% interest which is fantastic for a credit card, but is it ? My calculator wouldn't allow me to put in all the other parameters and figure out the length of the term.

So now, does the bank want their money more quickly or are they using some fuzzy math to bilk me ? I have heard of double dipping, and while I don't completely understand it, I know that if your bill is calculated that way you are paying almost double the stated interest rate.

Maybe the math is simpler than I think, i.e. that I am missing something. One of the main problems is that even though I try to use the card as little as possible, I still use it. Therefore a comparison between previous balance and current balance is not quite an accurate indicator. I'm just not quite sure how to figure this out.

Here are the crunchables :

Payment : $458.58 (they really need that fifty eight cents now I bet)
New balance : $26,104.25
Purchases and advances : $425.55 (rough month with moving and remodeling)
Within purchases and advances is :
Periodic Rate bla bla bla : $197.58

The question is how bad am I getting screwed ? I have the option to stop using the card and just pay it down. However I tend to use it because it is the lowest STATED rate card I have. So if anyone knows or has a way to figure it out, how long should a $26,000 loan take to amortize at 8.65% with a payment of $450 ? (rounder figures) I get a figure of about $187 monthly interest, but what of that other loan ? It just doesn't seem to add up.

T

Term....send me an mail address wherein which I can send you a program (long out of date...they've gone out of biz....it's all good)....click on the *.exe and it'll start up....it won't take more than an IQ of a Kumquat....you'll figure it out (if I can...you can)...you can run amortization schedules until your eyes bleed.

(By the way....that's not enough info...but you're close).

< Message edited by LookieNoNookie -- 7/20/2009 3:52:56 PM >

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RE: Amortization question - 7/20/2009 4:20:07 PM

OrionTheWolf

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~FR~

Approx 6.25 years

http://www.vertex42.com/Calculators/loan-amortization-calculator.html

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RE: Amortization question - 7/20/2009 4:22:05 PM

LookieNoNookie

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quote:

ORIGINAL: OrionTheWolf

~FR~

Approx 6.25 years

http://www.vertex42.com/Calculators/loan-amortization-calculator.html

Nope....can't get there from here....need more data.

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RE: Amortization question - 7/20/2009 4:23:36 PM

Termyn8or

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As I said it was a rough month. I usually don't charge that much but my Father died and we lived in a double house. I had to move from up to down and am in the process of remodeling upstairs to rent it. I have also been ill and missed some work. And even though I did get some real help from some good friends, between materials and weeding and feeding them, it was not for free. I might usually charge like half of that in a given month.

Even so, it screws up the numbers. I'm starting to think the only way to determine if this runs normal amortization or some fuzzy math like double dipping is to stop using the card totally and see what happens to the balance. I might just have to do that.

T

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RE: Amortization question - 7/20/2009 4:26:40 PM

Termyn8or

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Ahh, a few got in edgewise. Actually if this dies in 6¼ years I could live with that. But will it ?

What other info would be needed ?

T

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RE: Amortization question - 7/20/2009 6:13:28 PM

MasterG2kTR

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From: Wisconsin
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I agree with the others....somewhere between 6-7 yrs at the current interest and principal

.....fyi.....you will be paying a total of about $33,000 barring any future purchases on the card.

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RE: Amortization question - 7/20/2009 6:37:54 PM

Loxosceles

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Joined: 10/7/2008
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quote:

ORIGINAL: OrionTheWolf
Approx 6.25 years

That is 6.25 years if he doesn't charge another penny. He is currently spending as much as he is paying, so he will never pay it off at his current rate.

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RE: Amortization question - 7/21/2009 12:36:51 PM

pahunkboy

Posts: 33061
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From: Central Pennsylvania
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I would use the whole line up. Throw a party.

BTW- I was looking at Chapter 7 info- it looks like 8 years- not 7 years - as it had been before.

Seriously. Use up your card- buy some gold/silver- physical gold/silver in your hand.

When the coming devaluation occurs you can thank me.

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RE: Amortization question - 7/21/2009 5:10:24 PM

OrionTheWolf

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And?

The answer was given based upon the data that was given. Charge more, get a higher interest because of a late payment, or anything else that causes it to recalculate would be additional data.

quote:

ORIGINAL: Loxosceles

quote:

ORIGINAL: OrionTheWolf
Approx 6.25 years

That is 6.25 years if he doesn't charge another penny. He is currently spending as much as he is paying, so he will never pay it off at his current rate.

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RE: Amortization question - 7/21/2009 6:08:39 PM

servantforuse

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I would say cut up the cards. I am also interested in knowing how much was on that card before your ' rough month'?? Google Dave Ramsey. He has some very valuable advise on being and living debt free.

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RE: Amortization question - 7/21/2009 6:19:27 PM

Aneirin

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From: Tamaris
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Snowball the thing, pay off as much as you can afford and get rid of it. Credit is no good, maybe even the next financial crisis. If given the last disaster to do with banking, anyone that trusts financial institutions now, really need to think long and ard about it.

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RE: Amortization question - 7/21/2009 6:36:29 PM

pahunkboy

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From: Central Pennsylvania
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http://www.youtube.com/user/TheBobChapmanChannel

His vids 7-20 -09 worth a peek. He says a dollar devaluation is coming with in 2 years. The current thought is that $1 will be .33. This means that say gas at $2.50 a gallon will then cost $7.50 for the same gallon.

2 years is a lifetime away- but you can bet something not very nice is coming.

If get his pdf newsletter. It comes out 2x a week. Interesting stuff.

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