Regulations making Credit Card
Payments to Double
July 5th 2005
payments to double
minimum payment amounts are going to double. Federal regulators are
forcing the credit card customers to pay off more than just interest
payments. The banks are going to be forced to increase the minimum monthly payment
from 2 percent to 4 percent. MBNA, Citibank, and Bank of America have
already announced that they are increasing the minimum monthly payments.
More will be following suit to comply with the regulations.
The national average credit card debt per household is approximately
$10,000. About 40 percent of American households have a
on their credit cards
from month to month. If a persons minimum
payment was $200 per month it would be $400 per month due to the new
Wells Fargo for instance has implemented a plan that makes at least 1 percent of principle
due per month. The change for new accounts has already started back on
June 3rd. The current customers will receive notices in the
billing statement this fall and the changes will go into effect on Jan 1st
This could be a detriment to a large number of Americans with credit
card debt. Some people will not be able to make the minimum payments.
Some will be pushed to bankruptcy faster than before. Others may gain
a benefit of the push to eliminate their credit card debts sooner than
Banks have been worried about the negative impact this change will have on their business. The rules were originally
published in January of 2003. At that time the banks persuaded the US
comptroller of the Currency (OCC) to give a transition period for the
change. The regulators may lose their patience as compliance is now
What can the consumer do to patch up there financial situation? Budget all
of your expenses. By keeping a spending diary, you will be able to
see where the money is spent and be able to cut out the perks that you
donít need. Do not bring your credit cards out for shopping, leave
them at home. Changing your spending habits and set boundaries by paying with a fixed cash budget.
This will help you from
creating new debt. Some may want to cut out the satellite/cable TV service, discontinue
the cell phone service, donít eat out at restaurants, and substitute
your meals at home for economy budget meals. Check with the utilities
for low-income programs if you have a limited income. Refinancing the
house may help alleviate the debt, however, it does not fix the
financial problem which originally created the debt. Addressing the
root of what caused the debt and changing spending habits would be more
effective. Another solution is to talk with consumer credit counseling
services that offer debt-management programs.
Making a plan to accommodate this change is the best solution; however
it is very unlikely that Americans will embrace this and comply. There
is likely going to be an acceleration of bankruptcy for many of these
Americans that carry credit card balances.
Best Syndication Staff Writer
Keywords and misspellings: creditcard paymints
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