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.
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?