What happens when someone makes just the minimum payment on a credit card balance.
Voice over: On the hottest day of the year, Marta’s air conditioner broke. Marta decided it was an emergency. So she went to the store to buy a new air conditioner. Marta didn’t have enough cash, so she used her credit card. The air conditioner cost $300. That evening, her family was cool and happy.
The next month, Marta got her credit card bill for the $300 air conditioner. Marta had it in her budget to pay $15 each month until she finished paying for the air conditioner. $15 was her minimum payment.
Then, every month, Marta sent the minimum payment. But Marta’s balance didn’t go down $15 each month. The credit card company added interest to her balance every month. The annual interest rate on Marta’s credit card was 23 percent. So the credit card company added interest to Marta’s balance every month.
It took Marta more than 2 years to pay for the air conditioner, because she paid only the minimum payment. At the end of 2 years, Marta had paid $382: $300 for the air conditioner and $82 in interest.
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I admit it: I’m not the best at saving all my receipts and comparing them to my credit card statement at the end of the month. I do, however, check my credit card charges a couple times throughout the month to make sure everything looks OK.
Luck was on my side the other day, when I noticed a charge that seemed higher than what I remembered paying. I dug through my purse and found the crumpled dinner receipt at the bottom, buried beneath sunglasses, tissues and who knows what else.
When I compared the total at the bottom to what was on my statement, I realized I had been overcharged.
I’ve never had to deal with an incorrect charge on my credit card before, so I wasn’t sure exactly what I needed to do.
I went on the credit card website and there were very clear steps to follow to get the charge fixed. I called the customer service rep and she had the situation resolved in about five minutes.
I would be charged the amount on the receipt and the difference would be removed from my statement.
The moral of this story is that I need to be better about saving my receipts and reviewing my credit card statement so I can catch any future errors.
Have you ever had to dispute a charge on your credit card? Was it an easy process or did it take you a long time to get it resolved?