Minimums may or may not be going up
Did you catch the news about the upcoming changes for 2006 involving credit cards minimums? Eileen Alt Powell, AP Business Writer, reported some time ago that "under pressure from federal regulators, credit card issuers are raising the minimum payments consumers must make on their monthly bills.
If the claim holds to be true, many consumers will definitely be paying off their credit cards faster.
It is increasingly important to verify the validity of information found from internet sources as information tends to be tested and found to be inaccurate. Take for example a survey IndexCreditCards.com which finds that "contrary to reports in many media outlets, an IndexCreditCards.com survey of the seven largest credit card issuers found that none is doubling credit card minimum payments
Okay so maybe you won't be opening your mail anytime soon and find your credit card minimum have gone up. Should you take the initiative and increase your minimums on you own?
Here are a few people that suggest that you should:
Ronaleen Roha --"Avoid the Minimum Payment Trap"
Annelena Lobb, CNN/Money Staff Writer
"Credit Cards: 8 Dirty Secrets"
http://www.newhorizon.org -- "Stop Paying the Minimum"
Alan Barnes-- "Debt: Don't Pay Your Minimum Balance"
If the claim holds to be true, many consumers will definitely be paying off their credit cards faster.
It is increasingly important to verify the validity of information found from internet sources as information tends to be tested and found to be inaccurate. Take for example a survey IndexCreditCards.com which finds that "contrary to reports in many media outlets, an IndexCreditCards.com survey of the seven largest credit card issuers found that none is doubling credit card minimum payments
Okay so maybe you won't be opening your mail anytime soon and find your credit card minimum have gone up. Should you take the initiative and increase your minimums on you own?
Here are a few people that suggest that you should:
Ronaleen Roha --"Avoid the Minimum Payment Trap"
Annelena Lobb, CNN/Money Staff Writer
"Credit Cards: 8 Dirty Secrets"
http://www.newhorizon.org -- "Stop Paying the Minimum"
Alan Barnes-- "Debt: Don't Pay Your Minimum Balance"
posted by John.J.Crawford | 8:11 AM
1 Comments:
Hi,
Thanks for the mention of the IndexCreditCards.com article. I should mention, though, that the title "Survey Finds Largest Credit Card Issuers Not Doubling Minimum Payments" does not suggest that minimums are not going up, only that they are not doubling.
There is indeed a minimum payment increase, but much of the media had been calling it a doubling, so we surveyed the major credit card issuers to find out whether the increases were really that large -- they aren't.
The previous industry standard for minimum payments wad 2% of the complete credit card balance, which allowed those with high debt to pay the minimum without even paying off all their interest charges each month. This led to debt that snowballed and never got paid off.
The new standard from government guidance is a monthly minimum that includes all monthly interest and any fees (such as late fees or over-the-limit fees), plus 1% of the principal balance. As we noted in our story, this is leads to an increase in the minimums, but a fairly minor one, allowing cardholders to start paying down their cards without undue hardship, and not with any doubling of minimums as many news stories had previously suggested.
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