Re:Apple announces Apple Card credit card
by ineedasername on Monday March 25, 2019 @04:04PM
(#19486251)
In the US at least, banks are strongly encouraged (by law) to have a minimum fee that prevents the borrower from increasing the principal owed through cumulative interest (negative amortization). If the minimum payment might do this, the bank is required to disclose it to the borrower.
Basically it means that borrowers should at least be paying off the interest incurred on the principal owed at the beginning of the billing period.
E.g. generally a credit card will have a minimum of, say, $29/mo., if you have a balance of maybe $500... if you have a balance of $10K the minimum might go up to $129 or something. And if you don't pay the minimum, you're hit with the late fee.
I never really understood the purpose of minimum monthly payment, except maybe it's useful in proving you're not a complete deadbeat, and also probably not dead? Getting rid of it does seem like a consumer-friendly innovation maybe?