Boa mini cardIssuer:Credit Who's Raising Your Monthly Minimum Credit Card Payment? Whose idea was it to increase credit card minimum monthly payments? TheOffice of the Comptroller of the Currency, a bureau of the U.S. TreasuryDepartment boa mini card that has become more and more involved with reigning in the abusesof credit card companies. Yes, this credit card minimum payment increase wasthought up by people trying to help you.Who will be raising their monthly minimums? So far, some of the largestcredit card issuers have agreed to the new standards. Bank of America hasalready been asking for the higher monthly minimum payment. MBNA, Citigroup(a.k.a. Citibank), Discover, and Chase (on some of its cards) will be breakingthe news to their cardholders as Fall 2005 progresses. How Much Will Credit Card Minimums Increase? For many credit cards, such as MBNA and Bank of America, the new rates mean that monthly minimum payments will double. Right now, the monthly minimum payment is only 2% of the balance on mostof these cards. The new rate will be around 4% (the actual number may varyfrom card issuer to card issuer). This means that if you have the averageAmerican credit card balance of about $10,000, your minimum monthly paymentwill go from $200/month to $400/month.Of course, if you have any additional fees, whether a late fee or a cashadvance fee or any of the other fees that the credit card guys cook up, youwill have to pay that, too. Why the Credit Card Minimum Payment Increase? You may be wondering why anyone would want to make you pay a higher minimum monthly payment. The basic reason for making you pay more is: for your own good. According to Mike Peterson, co-founder of American Credit Foundation, by doubling the amount you pay per month toward credit card debt, you will cut down on what you pay toward interest by much more. Look: Old monthly minimum payment of 2% of balance, $2,000 credit card debt at18% percent interest: Time to pay off debt in full: about 30 years.Interest paid: about $5,000–two and a half times what you initiallyborrowed!New monthly minimum payment of 4% of balance, same debt: Time to pay off debt in full: about 10 years. Time saved vs. old payment:20 boa mini card years.Interest paid: about $1,100–slightly more than half what you originallyborrowed. Amount saved vs. old payment: $3,900.Tips for Paying Double EasilyHow do you pay off your new, higher credit card balance? Stop Charging. Yes, you will have to make major sacrifices to stop using your credit card. But just look at all the money you'll have in ten or thirty years that you wouldn't have if you had to pay all that credit card interest. If you have trouble resisting the temptation to charge, here are some solutions that have actually worked: Give your credit cards to a friend or family member to hold in safekeeping.Freeze the cards in a block of ice.Never carry more than one credit card with you. Economize on the Small Things According to Michael Peterson of the American Credit Foundation, even tiny savings really add up when it comes to debt. His favorite example is the Diet Coke example: If you buy one Diet Coke a day at $1/day, that's $365/year. If you instead invested that one dollar a day at 10% interest (the averageyearly return on major stocks over the last half century), you would be amillionaire within 56 years. Of course, with credit cards, this logic works in reverse: if you mini boa card arelucky enough to be paying only 10% interest, fifty years of charging Diet Coketo your credit card will mean you've lost the same amount, not only ininterest paid, but in the lost opportunity to save and invest.You don't have to put aside one dollar a day for fifty years to see a bigdifference. One dollar a day is $30/month, 15% of the average $200 increase incredit card minimum monthly payments.In order to get that entire $200 increase out of your daily budget, youwould only have to save $200/30 or less than $7 a day. OK, maybe you aren'tdrinking seven Diet Cokes at one dollar each a day. But there are very fewcredit-card-holding Americans who can't cut $7 a day out of theirspending.Put another way, $200/month works out to about $45/week, or the cost of arestaurant meal for a small family–another luxury you might want to skip untilyou're debt-free. Bigger Savings Taxes. Most Americans could pay hundreds of dollars less tax each year ifthey just took all the deductions they were eligible for upfront, rather thanwaiting to get a refund in April. By April, you will have spent a big chunk ofmoney on interest on debt that you wouldn't have spent if you'd had the moneyat hand.Call the credit card companies and ask if they can allow you to set up apayment plan, or at least provide a brief extension. Simply calling andletting them know you haven't forgotten about them can help keep you out ofthe worst trouble.Credit counseling. Credit counselors can talk with credit card issuers tohelp you get a repayment plan you can keep up with. They can also open youreyes to untapped sources of income you never knew you had, like kicking the$1,000,000 Diet Coke habit. In short, don't panic. With only a little bit of planning, you can make the higher minimum monthly payment work to your advantage, just as the policy's authors intended. APPLY FOR Boa mini card! |
REESTABLISH YOUR CREDITIf you have bad credit problems, you have probably had a difficult time obtaining a charge card or unsecured credit cards. One of the best ways to build or rebuild credit is to obtain credit. This may sound like a contradiction, but there are lenders who will grant credit to high risk consumers. Once you have the credit card, your proper use is reported to the credit bureaus. Just try to keep your balance below 50% of the available credit limit. Checkout our list of unsecured credit cards for those with bad credit, and unsecured Visa credit card offers...some with instant approval, including internet catalog cards (so you can shop online), merchant credit cards, and credit for college students. Begin the credit repair process by using guranteed prepaid credit cards (no employment verification or checking account required, low income ok) or low credit limit unsecured credit cards for people with bad credit. Most secured credit cards featured have guaranteed approval, once you mail in your prepayment deposit. Bad Credit Credit Cards |
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