Each credit card statement you receive includes a “minimum payment” amount along with transaction, balance and interest rate information. Depending on other parts of your financial situation and your spending habits, the temptation to pay only the minimum can be great. As tempting as it may be, you should always try to pay more.

Credit card companies usually calculate the monthly minimum payment due as a percentage of your outstanding balance. The percentage is usually more than the interest rate they are charging on your balance, but low enough to make the minimum payment amount seem attractive. After all, they make money by charging interest on what you owe.

The cost of paying only the minimum
As you consider how much to pay each month, be sure you understand how all the numbers work. To keep it relatively simple, let us assume you have an outstanding balance of $5,000, the annual interest rate being charged is 12% (1% per month) and the minimum payment is 2% of your outstanding balance. If you just pay the minimum of 2% ($100) and have no additional charges, $50 of the payment goes to pay the interest and your balance is paid down to $4,950. If you continued on that schedule, it would take you 299 months (almost 25 years) to pay off the balance. On the other hand, if you paid $250 each month, you would have the balance paid off in about 23 months.

As a practical matter, unless you stop using a card each month you will have additional charges, interest will be charged and you can decide how much over the minimum you wish to pay. Here are some charts that show how this could work.

Example 1. Assume you start with a balance of $5,000, have an additional $500 or $400 of charges each month and have a credit card with a 12% interest rate.

With $500 of additional
charges each month
With $400 of additional
charges each month
Payment Level # Payments needed to pay off the balance Payment Level # Payments needed to pay off the balance
$600 70 $600 29
$700 29 $700 19
$900 14 $900 11
$1,000 11 $1,000 9

Example 2. Assume you start with a balance of $5,000, have an additional $500 or $400 of charges each month and have a credit card with a 16% interest rate.

With $500 of additional
charges each month
With $400 of additional
charges each month
Payment Level # Payments needed to pay off the balance Payment Level # Payments needed to pay off the balance
$600 83 $600 31
$700 31 $700 19
$900 14 $900 11
$1,000 11 $1,000 9

Paying more than the monthly minimum will eliminate the balance much faster, save you considerable interest charges and provide some peace of mind knowing you are taking a prudent action.

Pay more than the minimum
Here are five ideas for finding cash to make the payments and reducing your credit card balance faster:

  1. Stop using the credit card.
    This simple idea will result in more of your payment being used to reduce a balance that is not growing due to usage.
  2. Use cash for more of your purchases.
    Fewer monthly charges will bring you balance down faster.
  3. Consider using some of your savings to pay down the balance.
    The rate you are earning on your savings is probably much less that what you are being charged on your balance. While no one likes the idea of depleting savings, if you can reduce your expense (interest charged) by more than your income (interest received), you will end up ahead.
  4. Consider some other type of loan.
    The interest rates charged on home equity loans, mortgages and even auto loans would probably be less than what is charged on your credit card.
  5. Cut back on your total spending.
    Conserving some cash, even for just a few months, and using it to make larger credit card payments can make a difference. It may even develop into a good habit.

Hot Topics

What is FAIRWINDS' Routing Number?

263181368

What are the 2013 IRA and HSA contribution limits?

Find out here.

When will I receive my 2012 5498 form?

Find out here.

What is a Routing Number?

FAIRWINDS' routing number (263181368) is used to identify FAIRWINDS Credit Union from other financial institutions and in no way identifies you or your accounts to others.

A routing transit number (RTN) is a nine digit bank code, used in the United States, to facilitate the sorting, bundling, and shipment of paper checks back to the drawer's (check writer's) account.

The RTN is also used by Federal Reserve Banks to process Fedwire funds transfers, and by the Automated Clearing House (ACH) to process direct deposits, bill payments, and other such automated transfers.

What can I do with my Relationship Rewards points?

Relationship Rewards provide you the opportunity to enjoy special member benefits including:

  • Buying down the interest rate on a loan.
  • Increasing your rate on a new CD.
  • Reducing service charges on additional products and services.
Learn more about our Relationship Rewards program.

How do I send or receive a wire?

To send a wire from FAIRWINDS, please provide the following:

  • Name, address and routing number of financial institution receiving the wire
  • Account number for the receiving account
  • Name and address of receiving account holder

There is a $20.00 service charge for an outgoing domestic wire from a personal account and a $25.00 service charge for an outgoing wire from a business account.

To receive a wire at the credit union, you will need to provide the following:

  • FAIRWINDS routing number (263-181-368)
  • Name of account holder
  • FAIRWINDS account number to receive the funds

There is a $10.00 service charge for an incoming domestic wire to a personal account and $15.00 service charge for an incoming wire to a business account.

*Please verify this information with the receiving financial institution as there may be an intermediary financial instititution involved.

When should I expect my 5498-ESA tax forms?

5498-ESA tax forms will be mailed by April 30th for all Coverdell Educational Savings Account owners who made contributions and/or rollovers into their ESA's in 2011.

5498 and 5498-SA tax forms will be mailed in mid-May for all Traditional, SEP, and Roth IRA owners and Health Savings Account owners who made contributions and/or rollovers into their IRA's and HSA's in 2011.

For questions regarding the 5498 forms please call Member Services at 407-277-5045 or visit your local branch.

When should I expect my tax forms?

FAIRWINDS mails 1099-INT and 1098 tax forms at the end of January. However, if you have e-Statements, these tax forms are available online right now!
Learn more here.

Members will only receive a 1099-INT form if the aggregate earnings amongst the accounts they are tax reported for (the primary owner) have earned at least $10 in interest.

These accounts include:
Savings, checking, money market, certificates of deposit, and US Bonds Redeemed, but do not include IRA accounts. If members have not earned at least $10 in interest, they will not receive a 1099-INT form.

Members will only receive a 1098 Mortgage Interest Statement if they paid $600 or more in interest on their mortgage.

FAIRWINDS mails 1099-R, 1099-Q, 1099-SA, and FMV/RMD statements to members by January 31st each year. We also mail 5498, 5498-SA, and 5498 ESA forms to members by the end of May.

Important information for all MasterCard® and VISA® credit and debit card holders.

You may have seen news stories recently about a potential data breach with MasterCard® and VISA® through a third-party payment processor. While there is no indication that any FAIRWINDS members have been impacted by this event, it is an opportunity to remind all consumers about the importance of being diligent, safeguarding your personal information and monitoring your accounts on a regular basis to minimize the effects of fraud.

Take the few extra steps to proactively protect your accounts. If you believe your credit or debit card information is at risk or unauthorized transactions have posted to your account, contact your financial institution immediately. In addition, you may want to consider looking into an identity theft alert program to keep you informed of activity on your accounts. There are many reputable programs available, including ID Secure. Click here to learn more.

There is an active texting scam occurring in the Central Florida area.

People are receiving a text at random stating their "card has been deactivated." This is a Scam!

Always remember, FAIRWINDS will never ask members to provide confidential information, such as debit or credit card numbers, PINs or Social Security numbers via email, text messages, direct mail or over the phone.

If you feel you are the victim of account fraud or identify theft, act immediately. This should help minimize the damage to your personal accounts and credit rating. Click here to learn more.

What are the 2013 IRA and HSA contribution limits?

Traditional and Roth IRA owners under age 50 may contribute up to $5,500 toward tax year 2013. A $1,000 catch up contribution may be added for Traditional and Roth IRA owners age 50 and over.

2013 SEP contribution limits have increased to a maximum of $51,000 or 25% of the employee's compensation, whichever is less.

HSA owners under age 55 with an individual HDHP (self coverage only) may contribute up to $3,250 toward tax year 2013. HSA owners under age 55 with a family HDHP may contribute up to $6,450 toward tax year 2013. A $1,000 catch up contribution may be added for HSA owners age 55 and over.

When will I receive my 2012 5498 form?

5498, 5498-SA, and 5498-ESA forms report IRA, HSA, and ESA contributions, rollovers, conversions, and fair market value (December 31st balance) information to the IRS and account owners. 5498 and 5498-SA forms are expected to be mailed by Saturday, May 18th.

Please contact Member Services at (407) 277-5045 or visit your local branch if you have questions about your form(s).

How can I make a prior year (2012) contribution to my IRA or HSA?

Eligible prior year (2012) IRA and HSA contributions may be made through the close of business on Monday, April 15th. The IRS requires signed documentation before contributions may be designated for a prior year.

Members can accomplish this by visiting a local branch during business hours or by submitting an e-Signed form through Retirement Central® and click Manage An Account on the left menu.