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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308519  
Subject: Re: Rant: Money books Date: 7/21/2006 2:59 PM
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Under the new minimum-payment rules, where most companies are going to 1% plus interest, it is basically interest-rate order. Under the old way, though, the way it was when the book was first published, most Visa and Mastercard issuers required 2 - 2.5% of the balance. So aside from special cases like store credit cards that might require higher payments, it doesn't really distinguish between the cards. If the debtor does have store cards or other short-term debts, this could free up some cash for later use, but under the old rules, what purpose did DOLP serve?

It was and is a way to balance cash flow vs. interest rate. There are still some card issuers who haven't gone to the 1% + interest + fees, since their minimum payment structure was already more than that. There was a recent post where someone mentioned a 3% minimum payment on a CapOne card.

Nowadays, the bigger the minimum payment for the same balance, the more likely you have a higher interest rate, so by dividing your balance by the minimum payment, you will tend to order in the interest rate order, but depending on the exact way your CC company figures the minimum payment, you could still end up paying a lower interest rate off first.

AJ
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