Credit Card Minimums to Double!

**SHOPGIRL** · 12-28-2005, 12:02 PM

You can sign up for updates on the suze orman site by registering to be the first to get the "What You Need to Know" updates. If you haven't already heard, the credit card minimum payments will double in 2006. So, for people that are really strapped for cash with lots of credit card payments to make, this could really make paying your bills tough. On the other hand, you'll pay off your credit card debt faster so you'll end up paying less in interest.

Credit Card Minimums to Double

At the prodding of federal regulators credit card companies are changing how they calculate the minimum monthly payment due on your balance. Currently, many issuers charge users just 2 percent of their balance. While that makes for lower payments, it also means you end up spending years-if not decades-working off the debt if you only make the minimum payment.

The new guidelines will increase the calculation to 4 percent of your balance.

So that means the minimum you owe each month is going to double. If money is already tight, you need to start budgeting now so you can handle the payment. Don't fall behind in your payments; you will do serious damage to your FICO score.

The change is being phased in by card issuers; check your next statement to see if your rate has been changed. While it may be painful to adjust to the higher required payments, this is actually very good news.

By requiring you to pay more each month you can pay down your balance a lot faster, and potentially save thousands of dollars in interest payments.

For example, let's say you have $5,000 in credit card debt and are paying 15 percent interest. Under the old system of charging you 2 percent of your balance, your monthly minimum payment would be $100. If you simply paid the minimum each month it would take more than 32 years to get the balance down to zero and you would pay nearly $8,000 in interest.

But if your minimum required payment rises to 4 percent of your balance, you would fork over $200 a month. Even if you just continued to make the monthly payment, your balance would be paid off in 11 years and your total interest payments would be about $2,200.

That's a huge difference. And you know my advice: do everything you can to find extra money to add to the minimum payment due. Even $20 or more each month is going to greatly reduce the time and interest costs neededebt paid off.

**SHOPGIRL** · 01-15-2006, 01:18 PM

Has anyone experienced their cc minimums doubling this year?

**KKCondrey** · 01-15-2006, 01:31 PM

so far mine has been the same.

**crdurham** · 01-15-2006, 01:37 PM

I have a small one that went up from $10 to $17. So far my other hasn't went up.... if it does, I will not be able to make the payment.

**motivated** · 01-15-2006, 02:15 PM

Thats going to hit a lot of people who are already struggling isn't it! All the more reason for sites like Frugal Village because it is really helpful for budgeting tips.

It will be good for those who have just started to use credit cards though - as you say they will pay down their debt faster and perhaps think again about paying by credit card in the first place. I am relieved I not in a bad situation though - makes you think a bit!

So lots of support for those struggling - read and learn from the experts on here how to trim the expenses

I hope I have done the vB bit right - what is it anyway lol!

**motivated** · 01-15-2006, 02:17 PM

oh oh I can see I have not done vB right - lol where's my jars?

**JaneP** · 01-16-2006, 02:35 PM

I haven't experienced any change in min. payments due other then them going down because the balance is going down.
Hopefully I'll be done with cc debt in the next couple of years but first I have to get it through DHs head not to use them any more.

**AmyBoz** · 01-16-2006, 03:26 PM

While I can certainly see the scariness in this for people who currently carry a credit card debt, my hope would be that this would stop people from charging more than they can pay off each month. I'm hoping this turns into a good thing.

**Deborah_Kate** · 01-16-2006, 04:00 PM

I guess it can only be a good thing if you don't carry debt. But, there are people like me who have had no choice in the matter and who will likely not be able to pay the minimums at all.

In my case nearly ALL of my debt is for medical bills and medications for me. A little over a year ago we thought I'd die and the medications I was taking were in the hundreds of dollars a month. The actual doctor bills, many thousands. We had no choice but to put them on credit cards, at the time I didn't want to die and thought I needed to do as I was told.

Now, over a year later, I am no longer seeing the group of quacks or taking the hundreds of dollars in meds every month. BUT, I still have to pay off the bills. Should these payments double, I have no idea how we will keep our house AND eat at the same time. I just don't see us being able to do both.

Deb