Credit Card Equipment

Minimum Credit Card Payments To Rise
By Charles Essmeier

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.

About the Author: ©Copyright 2005 by Retro Marketing. Charles
Essmeier is the owner of Retro Marketing, a firm devoted to
informational Websites, including http://www.End-Your-Debt.com,
a site devoted to debt consolidation and credit counseling, and
http://www.StructuredSettlementHelp.com, a site devoted to
information regarding structured settlements.

Source: http://www.isnare.com