Many national banks have already increased the minimum monthly payments on credit card balances and others are expected to follow suit during the next several months. Banks such as MBNA, Bank of America, JP Morgan Chase and Citibank are among those doubling the minimum payments on their cards.

It could actually be a good thing for consumers.


Full story...

http://www.themonroetimes.com/o0909pcr.htm

According to what I just heard on CNN the average debt is $9,000 per person. Doubling the minimum payment means an extra $200 per month or $2400 per year. The positive is that paying the minimum payment will actually reduce the principle (assuming you didn't charge more).

On the flip side some argue that $200 additional per month will be a huge burden. But if they can't afford to pay down their debt should they really be digging themselves deeper in debt?

It's been a while since I've had to carry a balance. Thankfully I now make enough to pay it off each month. So it's hard for me to be objective but if paying the minimum payment were that difficult on me I think I'd have to learn to be less reliant on credit. I would certainly use it less frivolously. So I see it as a good thing. Kind of a tough love.

Anyway, I thought it would be interesting to discuss.

I'm of the same opinion, actually, Michael. If I ring up a thousand dollars on my card in a month, what do they ask for, a $30 minimum payment? Its ridiculously low, because they want to keep you in debt longer, so they can charge you more interest. I think this will help far more consumers that it will hurt. Of course there will be people who it negatively affects, but I'd like to think it will end up being a positive effect instead, for the same reasons you mentioned. People who need to buy that much stuff above their income (either for food, medical supplies, etc) would probably be better off seeking help with their bills than whipping out the plastic. My husband works in legal services and helps people in these situations every day, and cannot tell you the number of times that people wished they spoke to him sooner.

Full story...

http://www.themonroetimes.com/o0909pcr.htm

According to what I just heard on CNN the average debt is $9,000 per person.

$ 9000 on average? :eek:
That is so much.... I think paying of faster is better, because it would save people a lot of interest. But, I don't know so much about this, I was only surprides at the high average dept...

Full story...

http://www.themonroetimes.com/o0909pcr.htm

According to what I just heard on CNN the average debt is $9,000 per person. Doubling the minimum payment means an extra $200 per month or $2400 per year. The positive is that paying the minimum payment will actually reduce the principle (assuming you didn't charge more).

On the flip side some argue that $200 additional per month will be a huge burden. But if they can't afford to pay down their debt should they really be digging themselves deeper in debt?

...

Anyway, I thought it would be interesting to discuss.

I don't really see this as a good thing. If the average person suddenly has $200 a month less in disposable funds, the average person might well think of cutting back on expenses. What should be cut first? Maybe, contributions to charity, like the Hurricane Katrina relief efforts. I just see this as backfiring in terms of the social good.

But there is no organized constituency to oppose these practices or launch TV ads asking people *not* to contribute to Katrina relief if they have credit card debt, so the credit card companies will do as they please.

ETA: I know many people become very angry about spelling corrections and the like, but I feel like pointing out that the correct word here is principal, i.e., "the original amount of a debt on which interest is calculated."

http://onelook.com/?w=principal&ls=a

The newspaper article cited incorrectly uses the word principle, presumably because the reporter never checked with the dictionary. Let's not keep repeating his error.

I already noticed an increase. I think it's a good thing. Except it's bad for me in that I have to pay more on my lower interest one leaving less to pay down the higher one.

It will be tough for people at first but better in the long run.

I've always thought the minimum payments were ridiculously low. I guess it's everybody's job to read the fine print but I bet there are lots of people out there that don't realize just how long they'll be in debt and how much interest they're paying when they just pay the minimum.

I don't really see this as a good thing. If the average person suddenly has $200 a month less in disposable funds, the average person might well think of cutting back on expenses. What should be cut first? Maybe, contributions to charity, like the Hurricane Katrina relief efforts. I just see this as backfiring in terms of the social good.


I think its admirable to wish that when people have an "extra" $100 bucks around (and of course that word means nothing when you're carrying 9K in debt), that they think to spend it on charities and the greater good, but what they really tend to spend it on is new nikes and CDs. Rather than even save it for an emergency! At least the people I know. The advertizers know it, too. :-(

I wonder if this is indicative of strain on the consumer debt system (which is helping to keep consumption afloat in the wake of stagnating wages) and falling profitability thereof...I wonder what's gonna happen next...

ebola

i agree with bstutzma. i just left a cashier job at zellers and its pretty sad how many people just spend senselessly on their credit cards. time after time after time i heard..."i just came in for catfood" (or whatever) but the person would be leaving with a cart full of crap. and yes, perhaps some of it was neccessary to buy, but i'd hazard a guess that most of it wasn't. especially when they are in day after day doing the same thing.

eta: unfortunately they most likely will blame a donation to hurricane katrina victims rather than their own lousy spending habits...

what i don't understand either is why one needs multiple cards?

I always thought that interest on the "revolving debt" that the credit companies charge was nasty.

If I charge $100 at 9% one month and not pay it, why can that change to 18% on the same $100 (+interest) the next month? I already borrowed the money from them, but the interest rate changed.

(Before anyone jumps down the credit card company's throat, remember: credit card holders agree to the terms, and its a free country. That doesn't mean that I can't think its icky!)

what i don't understand either is why one needs multiple cards?

I don't know that anyone needs multiple cards, but there can be good reasons for having them.

Example: I have one card for most purchases, that offers a % back, my amex for purchases where the benefits are useful (mostly, they double the length of any warranty on purchase), and a third card that sits in the safety deposit box in case our wallet's are stolen. None of them carry any annual fee, and I don't carry a balance.

Back on topic, I do think it's good to require higher minimum payments, whether people realize it or not the low minimum payments are to the benefit of the credit card company, not to them.

Example: I have one card for most purchases, that offers a % back, my amex for purchases where the benefits are useful (mostly, they double the length of any warranty on purchase), and a third card that sits in the safety deposit box in case our wallet's are stolen. None of them carry any annual fee, and I don't carry a balance.

ok, that makes sense, thanks :)

Yeah, I never really got the multiple card thing either but that's as good a reason as I can imagine. Particularly store cards which you could only use at one store vs. having a Visa or MC. But most store cards now are Visa or MC and can be used anywhere.

Oh my, I knew this was coming. My husband will have to reap what he sowed with 5 or 6k in debt, just in credit cards.:confused:

I tried to tell him oh so many times. In the state of Missouri, they can not get the spouse. My name is not on one of the credit cards.

My fica is a 680, close to perfect, I plan on it staying that way.

But on the flip side, I think this is good and bad. Sells will go down and also those mininum payments that people are used to mailing.

Is this a GW thing?:grr:

I think it makes sense. While it would eat up considerable income and make it hard for some people to make payments at all, it would force them to pay their cards down faster. Some cards' min. payments result in a net paydown of $10-$15, considering upwards of $145 in interest charges for the month. Now that hurts. Paying cards off faster helps the consumers more than it helps the banks.

>>Before anyone jumps down the credit card company's throat, remember: credit card holders agree to the terms, and its a free country.>>

No, it is clearly not a free country.

ebola

Yeah, I never really got the multiple card thing either but that's as good a reason as I can imagine. Particularly store cards which you could only use at one store vs. having a Visa or MC. But most store cards now are Visa or MC and can be used anywhere.

I know people who do that too. I have one personal credit card which I pay off every month, and I suppose an AMEX would be good for places that take it, but I always feel bad about that because AMEX charges the small businesses that accept it more than Visa or Mastercard do (the money to pay for the extra services has to come from somewhere.)

The higher minimum payments, new bankruptcy laws, high gasoline prices, and projected very high natural gas and heating oil prices will probably hurt a lot of people this coming Fall and Winter. :(

The new bankruptcy laws are a huge problem. my husband helps a lot of people with that and its become not only more difficult to apply, but more expensive to file because lawyers have to do a lot more work for them, and that costs the person filing even more money. My husband works for a non-profit firm that provides free legal care but not a lot of lawyers can do that.

I fear how many elderly will die in their homes this winter due to the inability to heat their homes. They don't detect the cold as well and succumb to it more quickly :-(

The higher minimum payments, new bankruptcy laws, high gasoline prices, and projected very high natural gas and heating oil prices will probably hurt a lot of people this coming Fall and Winter. :(

I believe John Conyers has a bill that would postpone the effective date of the new bankruptcy laws by two years, in order to soften the blow of Katrina. This sounds like a good idea to me.

I believe John Conyers has a bill that would postpone the effective date of the new bankruptcy laws by two years, in order to soften the blow of Katrina. This sounds like a good idea to me.
that would be nice:yes:

>>Before anyone jumps down the credit card company's throat, remember: credit card holders agree to the terms, and its a free country.>>

No, it is clearly not a free country.

ebola

It's free for the first 12 months, after which time the interest rate goes up to 22.99%, so pay it off before it's too late!