Minimum Payment Adjustments – Feedback Request

One of the feature requests that I get a lot of is the ability to have the program automatically adjust the monthly minimum payment on a debt account. Right now, you set the minimum payment on an account and it stays the same each month until it gets included in the snowball and ultimately paid off. To make the debt snowball table payment planner more accurate I need to add some logic to accommodate changes in the account’s balance over time. Here’s what I have planned so far:

  • Most credit card accounts (in the U.S. at least) use a percentage of the accounts balance, usually between 1% and 3% to determine the minimum payment due. There is also usually a “floor” that the minimum payment never falls below, like $25 for example. Lets say we have a credit card with a $2,000 balance at a 16.5% annual interest rate. Here’s how the minimum payment is calculated:
$2,000 balance * 2% of balance = $40 minimum monthly payment
  • Another way minimum payments are calculated is percentage of account balance plus interest accrued (compounded monthly). Using the same account in the example above, your minimum payment is calculated this way:
monthly accrued interest = ($2,000 * 16.5%) / 12 months =  $27.50
$2,000 balance * 2% of balance = $40
$27.50 + $40 =  $67.50 minimum monthly payment

What I have planned is to add an option to each debt to control minimum payments. You would have three choices:

  1. Do not automatically adjust minimum payment
  2. Use method #1 (set percentage rate & floor amount)
  3. Use method #2 (set percentage rate & floor amount)

Feedback Request

This is going to be a premium, Undebt.it+ user feature and I wanted to see if there is anything I am missing before I get too far along in the process. Do you have accounts that use other methods to calculate the minimum? Is it handled differently outside of the U.S.? Any ideas to improve the process? Thanks for your help.

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