Minimum Credit Card Payments to Rise

For years, major credit card companies have allowed cardholders to make minimum payments of 2% of the outstanding balances on their credit cards. Having customers pay the minimum doesn't reduce the balance by very much, but when the 18-30% interest rates that many credit cards charge is applied, the result is a profitable ones for the banks that issue credit cards. A balance of $1000 can take nine years to pay off at 20% interest if the borrower only pays the minimum due each month.

Clearly, it is not in the best interests of consumers to pay the minimum every month. But tens of thousands of Americans do just that, carrying huge balances and paying the minimum every month. The average household now carries $10,000 in credit card debt; for many people, paying the minimum is all they can manage. Due to changes in Federal law, several major credit card issuing banks will soon raise the minimum amount due to 4%. This might seem like a small increase, but if you are already deep in debt and paying the minimum amount, this could cause your payments to double. If you have a $10,000 balance and you are paying $200 per month, you will soon need to come up with $400 instead. Many people will find this impossible to do, as they are already paying as much as they can. What solutions are available?

The usual common sense rules of credit card use apply here. Stop using your credit cards. See if you can consolidate your debt on another credit card with lower interest. See if you can cut out some unnecessary expenses in order to free up some more money to pay your balance. Consider a home equity loan to consolidate your debt. Call your card issuing bank and see if they can work out repayment plan or lower your interest rate. There are numerous solutions available, but card holders need to be aware that the minimum payment is rising, and it isn't going to come back down. By charging a 4% minimum, the credit card issuing banks are hoping that consumers will pay off their debt a bit sooner and that fewer consumers will find themselves in a situation where filing for bankruptcy is the only solution. And once October comes around, even filing for bankruptcy will be more difficult. Credit card holders with large balances on their accounts should give considerable thought to reducing their debt now, as payment options and requirements are going to be more strict from now on.

©Copyright 2005 by Retro Marketing.

Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and StructuredSettlementHelp.com, a site devoted to information regarding structured settlements.

---

Five Reasons to Repair Your Credit Score - You Can Do It Yourself

There are multiple reasons that tell us why we should... Read More

Good Credit is King, When Qualifying for Mortgage Programs

If you want to purchase a new home or refinance... Read More

How To Get a Low Interest Credit Card

Consumers often have the first credit card that they ever... Read More

Credit and Its Cost

What is Credit? Credit is money granted by a lender... Read More

ChexSystems: Alternative Options for People Whove Been Checking Accounts

Individual banks elect to become members of ChexSystems, and to... Read More

Tips For Getting Your First Credit Card

Most of us get a credit card on our name... Read More

What is a Credit Report?

Ever wondered what is a credit report? If you've ever... Read More

How Do I Establish A Good Line of Credit?

A line of credit, roughly defined, is the amount of... Read More

Bailiffs & Council Tax - Knowing What To Do

This article is about bailiffs who may call trying to... Read More

Credit Counseling -- Why It Doesnt Work For Most Debtors

"Cut Your Payments in Half!" the headline screams. "Consolidate Your... Read More

Various Types of Credit Cards - Part 2

Several different types of credit cards offer several different options,... Read More

Credit Report Hassles

There is no end to the amount of pain that... Read More

How To Use Your Credit Card For Ultimate Financial Advantage

Using a credit card wisely is an important step in... Read More

Ethical Finance: Who Benefits From Our Spending?

On one hand consumers are being universally criticised for running... Read More

Fun with Credit Cards

For those of us who know how to use them... Read More

Check Your Credit Before Shopping For That Home Loan

Review Your Credit Score.Nearly every bank, credit union, and mortgage... Read More

What Is a FICO Score and How Do I Make It Work for Me?

Whether or not you receive a loan and what interest... Read More

Ways to Look Good without Selling Your Soul to the Credit Card Sharks

1. Buy clothes at thrift stores. BEFORE you buy them,... Read More

The Three Largest Factors In Your Interest Rate

There are three major factors that affect how much you... Read More

SuperCharged Secret 3, Credit Card Utopia

TURBO-CHARGED KILLER RATE SAVING INFORMATION!Let's just take a brief moment... Read More

Top 7 Factors to Consider While Reviewing Credit Card Offers

Credit cards have migrated from being hip or convenience product... Read More

Ten Steps To Building A Good Credit History

Are you thinking of buying a house? Do you want... Read More

How to Order the Right Credit Reports to Repair Your Own Credit

In this week's article, I am going to offer some... Read More

Beware of Bogus Credit Repair Companies!

So-called "credit repair" companies claim they can remove negative information... Read More

What Does Your Credit Say About You?

A credit report is more than just a snapshot of... Read More

Credit Cards

Credit cards are a form of unsecured credit. The issuer... Read More

Credit Reports: Find out why you have been refused Credit.

You may already have 2 or more credit cards in... Read More

Dealing With and Repairing Bad Credit

Bad credit can be a burden for otherwise good credit.... Read More

Free Credit Report ? Watch Out for Scams

Many people may still not be aware of an amendment... Read More

Useful Tips On Avoiding Credit and Charge Card Fraud

Credit and charge card fraud costs cardholders and issuers hundreds... Read More

Identity Theft - Dont Think You Are Immune

As identity theft becomes more prevalent, the need to regularly... Read More

What Is A Credit Report?

Even if you have heard of a credit report, you... Read More

Maximizing Credit Card Rewards

We spend money every single day on many different types... Read More