Credit Card Companies Doubling Payments

Several of the largest credit card companies will start requiring customers to pay 4% of their balance rather than the current 2%, at the urging of the federal government.

New Credit Card Payment Requirements Bring Good, Bad News (YahooNews)

If you have a high balance on your credit cards, you may be in for a shock when the next bill comes. Within the next month, Bank of America, MBNA and Citigroup will raise minimum monthly payments on their cards from 2 percent of the balance to up to 4 percent, not including interest. Other card issuers are expected to make similar changes by the end of the year.

The good news is that the time it takes to pay off a balance will take much less time — if you have the money to make the minimum payments. “On the good side of that, they will get out of debt faster, but on the down side, it’s gonna be a squeeze,” Greg Burgess, of Compass of Carolina, told WYFF News 4’s Tim Waller.

Credit card companies are under mounting pressure by the government to raise the minimum monthly payments to help Americans get out of debt more quickly. If you can’t afford the increase, experts recommend that you contact your credit card company and try to negotiate a lower interest rate, which could offer some relief.

“Get help, stop and look. Because, basically, it’s a hole that’s being dug at the point, and it just gets deeper and deeper,” Burgess said.

There’s little doubt that doubling the minimum payment would get people out of debt faster–providing, of course, that they can make the payment. Doing so in mid stride, though, when people have already accumulated debt based on the 2% total, strikes me as patently unfair.

Morever, it’s unclear why the feds need to be involved in such decisions. Regulating maximum rates, late payment penalties, and other practices to prevent companies from taking advantage of customers are at least arguably within the perview of the government’s responsibilities over interstate commerce. But minimum payments?

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College. He's a former Army officer and Desert Storm veteran. Views expressed here are his own. Follow James on Twitter @DrJJoyner.


  1. The feds didn’t pass a law on this. While the government can “urge” all it wants, that’s a far cry from passing a law. And with a full plate and a recess coming up, it’s not like there was any real threat to do anything soon.

    This is probably in response to the latest bankruptcy bill, when those who didn’t like it brought up the 2% minimum as a major complaint. Also, the PBS debt documentary that was on at the same time that law passed made a big deal of this issue as well. So now they are doing something about it, and people are complaining that they are raising the minimum.

    You you can call it “unfair” all you want, but it is within the terms of the credit agreement. I didn’t see anyone complain when the minimum payment went the other direction.

  2. There’s one great way to deal with this: try to pay off your balance every month. It sounds stupid to say that, but living within your means quite simply ROCKS. This society so wants us to buy more more more, and thence to be constantly in debt — and then get just one more credit card to do it all over again. But it’s amazing how the unbelievably high interest payments simply disappear when you pay off your balances. Minimum payments are then completely a non-issue.

  3. bryan says:

    Between this and the fed’s constant interest rate increases, I predict a big slowdown in the U.S. economy. It may be good for the consumer in the long run, but I predict it’s going to hit a lot of big ticket item companies very hard.

  4. ALS says:

    More nanny-ism.

    I can’t save for my own retirement. I can’t make my own decisions with regard to seat belt use, cigarette smoking, or paying my bills.

    My government has to decide those things for me.

    Thank God they are constantly there to bail me out.

    What on earth would I do if I had to make all these decisions for myself?

  5. Sounds like a recipe for increasing the number of bankruptcies. When that happens, watch Bush get blamed for it.

  6. bryan says:

    I meant to mention the bankruptcy changes along with the raised interest rates and now higher minimums. You might as well throw in higher gas prices, too. Most of our economy is based on consumer spending, and if that goes, we’re going to be in a world of recession. It’s going to make the next election very interesting if it happens. But what do I know, IANAE (I am not an economist).

  7. Herb says:

    When you have a credit card, you ask to have them put the screws to you, so don’t complain about it. The percentage problem is an easy problem to solve.

    Get rid of the Credit Card.

  8. anjin-san says:

    I wonder if the goverment will follow suit & start to pay off its own massive debt…

    Not holding my breath, the GOP spends at a rate that makes a navy of drunken sailors look like amatures.

  9. ZZ says:

    Most of our economy is based on consumer spending, and if that goes, we’re going to be in a world of recession

    Actually that ought to read most of the world economy is based on our consumer spending, and if that goes, we’re going to be in a world recession. 😉

    I wonder if the goverment will follow suit & start to pay off its own massive debt…

    Why? Our public debt as a percentage of GDP is comparable or lower than that of most developed countries. More importantly, the federal government doesn’t retire and live of a social security check or a pension plan or some other source of fixed income. I would rather the government balance the budget without hurting economic growth rates and allow the debt to become an ever smaller fraction of GDP.

  10. anjin-san says:

    Guess ZZ is not worried about those nice guys in the Chinese goverment holding so much of our paper…

  11. John Thacker says:


    If those nice guys in the Chinese government didn’t hold so much of our paper, they’d be using the same money to buy up US companies instead. I imagine that we’d be hearing complaints then anyway. Their money would go somewhere, and the US is the best place for them to invest it. Hence they’ll invest here whether privately or publically.