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Credit Card Minimum Monthly Payments Double Due to New Rules

January 3rd 2006

Credit Card Minimum Monthly Payments Double Due to New Rules

Changes in Rules

This may not be the best time to require credit card companies to double their minimum payments.  There are numerous stories of cash strapped families now hamstrung with debt barely able to make their minimum payments.  Starting this month the minimum payments required by credit card companies will double.

Most credit card companies would require minimum payments of just 2% of the principle.  Now over their own objections, they are required to raise that minimum payment to 4%. 

That is right; the credit card companies did not want this new regulation.  They would make more money if the minimums were set at 2%, not 4%. Some credit card companies have already raised their minimums but this month the rest will be required to follow suit.

 

These guidelines have been issued by the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and other federal regulators. Combine this with the new bankruptcy laws passed last year by congress, consumers may experience some major problems.

Credit cards are commonly used to pay off major medical bills or start a business.  These types of expenditures can cause credit card balances to skyrocket.  Some 40% of households have a balance on their credit card from month to month averaging $10,000. 

There are some things you need to be careful of when you consolidate your credit card debt.  For instance, companies may charge more than one interest rate on the balance.  They may have a lower rate for balance transfers. 

 

Letís say you transfer $10,000 onto a promotional card and then charge a set of tires for $800 on that same card. The bank may have a promotional rate of 2% on the balance transfer but charge a 10% rate on all other charges.  Now when you make your monthly payment the bank will apply it to the lower interest rate portion of your balance.  When you transfer money you should consider using another card for your purchases and hide the transfer card so you donít accidentally use it.

There are credit counseling services available.  Basically they can help you consolidate your debt into one payment, and possibly help you lower your interest rates.  Also, keep an eye on the banks.  Some may charge the wrong promotional rate.  Always check your statement!   

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By Dan Wilson
Best Syndication Staff Writer

Books Concerning Credit
 

Keywords and misspellings:  credit card creditcard monthy monthly paiment


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Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:48 PM