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.

---

Getting Your Credit Report and Understanding Whats On It

If you intend to apply for a loan, you need to obtain your credit score. Understanding what this score means will allow you to make the loan... Read More

What Is the Fair Credit Reporting Act and What You Should Know About It

The Fair Credit Reporting Act (FCRA) and the recent update to this law called the Fair and Accurate Credit Transactions Act (FACTA) protect consumers against inaccurate information... Read More

Credit Report ? Look Out for Your Debit Report, Too

Most consumers are aware that there are companies that keep track of their personal financial transactions ? installment loans, mortgages, credit card accounts, bankruptcies and judgements. These... Read More

Credit and Loan Help for Mortgage Loans

Mortgage loans are some of the most difficult loans to receive if you have bad credit because lenders focus heavily on your credit score and history of... Read More

Protect Yourself Against Identity Theft

Identity theft is when someone uses, without permission, your personal information in order to commit any frauds or crimes. Identity theft is a felony that is becoming... Read More

Special Credit Information for Married Couples

If you are married, establish separate credit accounts.Try to finance real estate in just one partner's name to increase your investment financing potential.Avoid joint credit, which limits... Read More

Making Sense of the Information in Your Credit Report

If you've ever applied for a credit card or loan, you've probably had your credit report reviewed by the lender. Your credit report has a huge impact... Read More

Saving Money with Credit Cards

Having a credit card is a wonderful convenience for those times when you don't have immediate access to your cash. It can allow you to purchase something... Read More

Choosing A New Credit Card

1. Choosing A new credit cardThere are many reasons for choosing a new credit card.It may be your first card or you may wish to reduce the... Read More

Know Your Credit Card Rights

When you apply for a credit card, the application that you sign is also a legally binding contract laying out all the termsbetween you and the bank,... Read More

Stop Struggling Because Of Poor Credit And Improve Credit Rating Now

Did you apply for a personal loan only to be turned down by a bank or lending institution? Like most people there is always a need to... Read More

Bank Robbery Growing In U.S.

Bank robbery has grown to become a huge problem in the United States but I am not talking about people robbing banks. I am talking about banks... Read More

Stop Credit Card Offers

You can stop receiving credit card offers in the mail! It's really easy to do - just phone 1-888-567-8688 and follow the prompts and provide the requested... Read More

Small Business Credit Cards

So what do you look for when applying for a credit card for your small business? One thing is for sure, wasting money isn't an option because... Read More

Improving Your Credit Report

Even if you think you have a wonderful credit report, be wary of the error factor. Just as you receive mail with your name and address misspelled,... Read More

Identity Theft : They Got Him

His hard earned money? Gone. Creditors on his back everyday. Police knocking on his door. His family strained to the breaking point. He didn't do anything wrong... Read More

It Takes Credit To Build Credit

Using a credit card wisely is an important step in building a good credit rating. If you're trying to re-build your credit or if you're young and... Read More

Triple AAA in 30 Days

Have you ever wonder about how to get good credit with spending alot of money. Well here is a little secret I used to get my credit... Read More

What Does Your Credit Score Tell You?

When you apply for a loan or a mortgage, the first thing the lender does is to check your credit score. Based on your credit score, the... Read More

How did a Thief get my Name? Don?t be a Victim of Identity Theft

How do these people get my name? If you have a credit card, your name is sold to third parties, if you do not want this to... Read More

How To Use Your Credit Card For Ultimate Financial Advantage

Using a credit card wisely is an important step in building a great credit rating. If you're trying to re-build your credit or if you're young and... Read More

New Law Provides Free Annual Credit Report

As of Thursday, December 1, 2004, one-third of Americans will be able to access their credit reports from all three main agencies for free. Passed in late... Read More

Dont Fall For A Scheme When Trying To Rebuild Your Credit History

For people with a spotty credit history or bad credit, getting approved for a standard credit card can be difficult, if not impossible.There are a number of... Read More

Bad Credit Loans For Those Who Seek Alternatives for New or Old Car

You can still save money on a Bad Credit Loan by comparing rates, checking out multiple policies, and negotiating with lenders.Getting a Bad Credit Loan doesn't have... Read More

How a Credit Card Can Be Your Friend

We have all heard countless stories of people over their heads with credit card debt-maxing out every card they own, then only being able to afford the... Read More

Finding the Right Credit Card

There are so many credit cards out there to choose from that deciding which one to get can feel really daunting. What makes one offer better than... Read More