Minimum CC Payments Doubling?
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Minimum CC Payments Doubling?
| Tue, 05-24-2005 - 10:31pm |
I receive an online newsletter from the About.com credit card moderator and he's posted an article saying that all CC companies are in the process of doubling their minimum payments from 2% to 4%. I believe he said Bank of America has already done this.
Has anyone else heard anything about this? I have to admit it sent me into an absolute panic, as we have 2 CCs and my dh is currently laid off and I only work part-time. I'm still paying a bit more than the minimum on the cards each month, but if they double, I don't know what I'm going to do...

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You have to wonder whether the credit card companies have been delaying the implementation of this until after the bankruptcy bill that THEY wrote goes into effect.
Did anyone see The Secret Life of Credit Cards, the PBS special?
All my best,
Danni
Here's another good article on the subject.
http://www.sltrib.com/business/ci_2761273
It does repeat a lot of what has been touched on but gives detail about Citi's new minimum payment. It will be the interest plus 1% of the outstanding balance. I figured out what I pay on my card with 3.9% interest and if they implement the new minimum payement plan my minimum payment per month would actualy go down and not up. I currently have 2% of $9875 as my minimum payment which is $197. Under the new plan I would have a minimum payment of $32.90 of interest and 1% of the remaining balance of $98.75 for a grand total new minimum of $131.65. So as you can see this new minimum plan as Citigroup has it would actually lower my minimum payement. Now, I doubt that will happen but instead what I think they will do is look at people that have negative amortization or an extemly lon (30 year) amortization and they will go under the new regulation. You may want to do some calculations of your current minimum plans and see if you will even be effected.
Sorry to keep posting but this is probably the best article I've read on the subject.
http://www.philly.com/mld/inquirer/business/11598558.htm
Looks like probably fewer than 10% of card holders will be effected by the new rules. And as I thought the credit card companies DO NOT like these new rules. If every minimum payment you make pays down some principle you probably won't be effected. That's my take anyway.
In my case, I got started on credit cards in college and it was just so easy to charge things. Flash forward a few years and all of a sudden I was using credit cards to get by. It was after my DH was laid off when I realized that if I didn't have to make credit card payments, I would not need to use credit cards. My balances built up because my minimums were not reducing principal. I never looked at how much I really owed, just how much my payment was. Having low minimum payments allows us to really live beyond our means and become dependant on cards. Reminds me of a company town. You work for a company in a town they own, live in a house they own and shop at stores they own. But your pay never really covers your expenses so you have to keep working for them because you owe them money (late 19th and early 20th century always favored business), much like sharecropping.
Anyway, maybe someone should start a grassroots campaign to end predatory and irresponsible lending practices. I am tired of seeing commericials that say "bad credit, no credit, no problem." Interest rates need to be capped at a decent rate, perhaps a maximum percentage amount over the prime rate.
Sandra
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