The difference between the two:

When our overdraft amount exceeds the repayment affordability last month, or when we are temporarily strapped for cash and can't pay back the full amount, we can use billing installment and minimum repayment to alleviate the pressure of repaying the loan, which won't affect our credit score, but it will incur some interest. So, which repayment method is more cost-effective?

We know that repayment by installment will charge a fee based on the installment amount and the number of installments, and the rate varies according to different banks and different installment periods. Minimum repayment, on the other hand, will charge the outstanding portion of the installment at a daily interest rate of 0.05% from the date the purchase is credited, compounded on a monthly basis.

Assuming that the bank's installment repayment fee is 0.72% per month, let's calculate the difference between installment repayment and minimum repayment by using a positive example.

*Example story

Miss Wang spent 6,000 yuan on Nov. 15, and her credit card billing date is the fourth of each month, with the last payment date on the 24th of the month. there is only one purchase on her Dec. 4 bill, but she only has a maximum of 2,300 yuan a month to spend on repayments. Ms. Wang plans to repay the bill in 3 installments. She did some rough calculations

Monthly repayment principal = 6,000 ÷ 3 = 2,000 yuan;

Monthly repayment fee = 6,000 x 0.72% = 43.2 yuan;

Total monthly repayment = 2,000 + 43.2 = 2,043.2 yuan

Total 3-period fee = 43.2 x 3 = $129.6.

The monthly repayment amount in 3 installments is within the acceptable range, and the total **** is only 129.6 yuan more in handling fees (interest).

Miss Wang also calculated the minimum repayment. She receives her paycheck on the 10th of every month, and assuming she pays off her credit card with the available amount on the same day she receives her paycheck, the most frugal repayment has been calculated as follows.

December 10 repayment of 2300 yuan, more than the minimum payment standard but not up to the full payment, according to the minimum repayment standard, the outstanding part of the 6000-2300 = 3700 yuan, as of January 4 bill, you need to pay the interest of 3700 yuan × 0.05% × 50 days = 92.5 yuan, the total amount of the bill is 3700 + 92.5 yuan = 3792.5 yuan .

January 10 repayment of 2300 yuan, the unpaid portion of the principal 3700 - 2300 = 1400 yuan, as of February 4, the bill, the principal should pay interest for 1400 yuan × 0.05% × 81 days = 56.7 yuan, the interest portion of the interest needs to pay interest 92.5 yuan × 0.05% × 31 days = 1.43 yuan, the bill The total amount is 1550.63 yuan

Paying back the loan immediately after receiving the salary on February 10, the required amount is based on the bill of February 4, both principal and interest added 6 days of interest, that is, the total interest is 1400 yuan × 0.05% × 87 days + 92.5 yuan × 0.05% × 37 days = 62.61 yuan, and you need to pay back 1555.11 yuan with interest.

So, if you use the minimum payment method, *** need to pay back 2300 + 2300 + 1555.11 - 6155.11 yuan, the interest is 155.11 yuan.

In summary, within Ms. Wang's repayment ability, the use of installment repayment additional expenditure of 129.6 yuan, while the use of minimum repayment expenditure of 155.11 yuan, the former than the latter cost-effective.

But not all installment repayment is more cost-effective than the minimum repayment, such as the above example, if Ms. Wang did not have a monthly limit of only 2,300 yuan, but only in the December 26 can not get 5,000 yuan before, and on January 10 can be repaid, then she only need to pay back on January 10, 3803.88 yuan, the total repayment amount of 6,103.88 yuan, which would be more cost-effective than repaying the loan in installments.

So how do you decide between bill installment and minimum payment? To take into account the actual situation, installment repayment is suitable for bills or single purchases that are large and cannot be repaid in full within a short period of time, while minimum repayment is more suitable for cases where you just don't have enough money to repay at that time, but you can come up with the full amount owed within a short period of time.

Applying for a credit line repayment with the Payback app can also ease the pressure of repayment.