| any years, the major credit card companies have | | | | charging a monthly minimum of 4%. This may not |
| allowed their customers to pay as little as 2% of | | | | seem like much, but for those with large balances, |
| their outstanding balance each month. This | | | | a doubling of the minimum payment could be |
| payment, while minimal, has actually allowed the | | | | devastating. |
| credit card companies to reap record profits, | | | | A $200 monthly payment for someone with a |
| mostly because of high interest rates. While | | | | $10,000 balance will now become $400, and for |
| interest rates on home loans have lately been in | | | | many Americans, that increase could drive them |
| the neighborhood of six percent, the interest | | | | to file for bankruptcy. Should you find yourself |
| rates on credit cards sometimes reach as much | | | | with a large balance and a minimum payment that |
| as thirty percent per year! | | | | may be hard to pay, what can you do? |
| The customer may not be paying much on the | | | | Without preaching, a little bit of common sense |
| principal, but if they fail to pay that principal, the | | | | should be applied in this situation. Cardholders with |
| interest accrues quite quickly. In fact, it can take | | | | such problems should, first and foremost, stop |
| more than nine years to pay off a simple $1000 | | | | using their credit cards. Adding debt to a debt |
| balance if the cardholder only makes the minimum | | | | problem is not good. The next step would be to |
| payment each month at an interest rate of 20%. | | | | try to cut some household expenses to raise |
| Obviously, it is not in the best interests of any | | | | money to meet the new obligation. Buying lunch |
| cardholder to make only the minimum payment | | | | at work? Can you take a sack lunch instead? Can |
| each month. Many Americans can’t afford | | | | you consolidate your debt with a home equity line |
| to pay more, as the average credit card debt in a | | | | of credit? Try calling your bank and see if you |
| U.S. household is now approaching $10,000. On | | | | can negotiate a better interest rate or a more |
| such a debt, the minimum payment would be | | | | favorable repayment schedule. It’s not |
| $200, and for many, that is all they can afford to | | | | likely to work, but it’s worth a try. |
| pay. At this rate, someone who holds the | | | | There are numerous solutions available to anyone |
| average amount of debt would probably need | | | | with problem debt, but this fact is obvious - once |
| their grandchildren to finish paying it off for them; | | | | the minimum payment goes up, it will not come |
| it could literally take generations to pay off that bill | | | | down again. The credit card companies, by |
| at 2% per month. That is about to change. | | | | increasing the minimum payment, are trying to |
| A recent change in Federal law requires the major | | | | avoid situations where debtors cannot pay their |
| credit card companies to increase their minimum | | | | monthly bills. The 4% rate will allow most |
| monthly payment. The law was passed some | | | | cardholders to pay their bills sooner, and will |
| two years ago, but the lenders were given a | | | | probably cause fewer customers to default on |
| grace period to allow them to comply. Soon, | | | | their payments. That should benefit everyone. |
| several major credit card companies will begin | | | | |