Minimum Payments On Credit Cards Will Soon Be Higher
Minimum Payments On Credit Cards Will Soon Be Higher
Most people use credit cards. Merchants report that nearly all
customers make purchases with a credit card rather than with
cash. Credit card users may want to pay attention to a new
regulation that will affect credit card lenders. Due to recently
implemented federal regulations, credit card companies will begin
requiring cardholders to pay higher minimum payments each month.
Some lenders have already put the new payment regulations in place and
the rest are expected to follow by early 2006.
Cardholders who have previously been required to pay 1% of their
outstanding balance, will now have to pay the interest charges for that
month, any fees that have accumulated such as late fees or fees due to
exceeding the credit limit, plus the original 1%. These changes
have been put into place because very often the minimum payment amounts
did not even cover that month's interest charges, making it virtually
impossible to pay down the balance of the credit card.
Federal regulators have made these changes as a way to protect
consumers from accumulating extremely high interest charges and
building credit card debt that would take 30 years or more to pay down
if the consumer made only the minimum payments. The language of
the new regulations states that credit card companies must require
cardholders to pay all monthly interest and fees, plus a reasonable
amount of the principal. Credit card companies and federal
regulators have agreed that 1% is a reasonable amount of principal.
