Your credit card payment just doubled

[ScreamingEagle]

Good news: Credit card companies are doubling their minimum payments.

Bad news: Credit card companies are doubling their minimum payments.

Huh?

So far, MBNA, Citibank and Bank of America have announced they are doubling minimum monthly payments on credit card balances from 2% to 4%. Others are expected to follow suit quickly. To some cardholders, that could be seen as a good thing. To others it could be devastating.

http://moneycentral.msn.com/content/Banking/creditcardsmarts/P117014.asp

So if you got $5,000 in credit card debt and your min pmt is $100 your monthly payment will now become $200! That's a pretty serious increase - especially if you've been budgeting tightly or you got high balances.

How do the credit card companies get away with this? Didn't people accept and charge on their cards knowing that there would be only a 2% min pmt? (who on earth can read the tons of fine print?) What if banks just decided to double your mortgage payments? Maybe we need to read the fine print on our mortages too?

 

[freeandfun1]

If you're that bad off, you're in trouble. If all one can afford to pay on a debt is 2% of the debt, then they shouldn't get in debt in the first place.

My credit card payments didn't double, because I don't maintain a balance. If I can't afford it... guess what... I DON'T buy it.

 

[freeandfun1]

How do the credit card companies get away with this? Didn't people accept and charge on their cards knowing that there would be only a 2% min pmt? (who on earth can read the tons of fine print?) What if banks just decided to double your mortgage payments? Maybe we need to read the fine print on our mortages too?

Mortgages are set on a defined amortization schedule. Credit cards are REVOLVING credit. HUGE difference.

 

[GotZoom]

This, right after the new Bankruptcy law changes - which were pushed by the CC companies so they couldn't be included so easily - are going to put a lot people in some serious trouble.

They can change anything they want to, anytime they want to.

You are right - Who reads all that find print.

Shameful.

 

[5stringJeff]

So if you got $5,000 in credit card debt and your min pmt is $100 your monthly payment will now become $200! That's a pretty serious increase - especially if you've been budgeting tightly or you got high balances.

How do the credit card companies get away with this? Didn't people accept and charge on their cards knowing that there would be only a 2% min pmt? (who on earth can read the tons of fine print?) What if banks just decided to double your mortgage payments? Maybe we need to read the fine print on our mortages too?

Frankly, it's great news, both for the CC companies and the cardholders.

The companies get their money quicker.

The cardholders gets out of debt quicker!

 

[GotZoom]

If you're that bad off, you're in trouble. If all one can afford to pay on a debt is 2% of the debt, then they shouldn't get in debt in the first place.

My credit card payments didn't double, because I don't maintain a balance. If I can't afford it... guess what... I DON'T buy it.

 

[ScreamingEagle]

If you're that bad off, you're in trouble. If all one can afford to pay on a debt is 2% of the debt, then they shouldn't get in debt in the first place.

My credit card payments didn't double, because I don't maintain a balance. If I can't afford it... guess what... I DON'T buy it.

I'm not personally that bad off but there are a LOT of Americans who live from paycheck to paycheck and another $100 to $200 payment per month is going to cause problems.

I believe I've heard the average credit card debt is about $7,000.

 

[5stringJeff]

I'm not personally that bad off but there are a LOT of Americans who live from paycheck to paycheck and another $100 to $200 payment per month is going to cause problems.

I believe I've heard the average credit card debt is about $7,000.

A lot of Americans should consider selling stuff they don't need. That sounds harsh, but they've obviously bought a bunch of stuff on credit; if they can't afford to keep it, they should sell it to liquidate the funds.

 

[ScreamingEagle]

Mortgages are set on a defined amortization schedule. Credit cards are REVOLVING credit. HUGE difference.

Please explain the difference regarding min pmt. I thought revolving credit has to do with how the payments are computed based upon the balance.

However, changing the terms of the payment is another thing...what if your credit card company just decided arbitrarily to increase your rate from 10% to 20%? A minimum payment rate kinda falls into the same category, doesn't it?

Talk about jacking around the American public.

 

[GotZoom]

Fixed rate mortgages is one percentage rate and it doesn't change. There are all kinds of mortgages that do different things; Prime plus 2 percent, interest only, etc.

The CC companies can do whatever they want, as long as it is in their fine print. They can raise your rate to un-godly high amounts (I have seen 33%) if you are even one day late with your payment.

Please explain the difference. I thought revolving credit has to do with how the payments are computed based upon the balance.

However, changing the terms of the payment is another thing...what if your credit card company just decided arbitrarily to increase your rate from 10% to 20%? A minimum payment rate kinda falls into the same category, doesn't it?

Talk about jacking around the American public.

 

[freeandfun1]

Please explain the difference regarding min pmt. I thought revolving credit has to do with how the payments are computed based upon the balance.

However, changing the terms of the payment is another thing...what if your credit card company just decided arbitrarily to increase your rate from 10% to 20%? A minimum payment rate kinda falls into the same category, doesn't it?

Talk about jacking around the American public.

If you don't pay your debt as agreed, they can jack up your interest rate. They can *gasp* even call your loan!

Loans are just that, loans. They are giving you credit based on what your credit worthiness appears to be. If you fall behind on a home mortgage, credit card, etc., the lender has a right to call in the entire amount. I am sure that there is some kind of grandfather clause that will allow those with existing balances to continue paying as agreed, but then having to pay the new rate on new charges.

We love to ignore how in debt Americans are and paint the CC companies, banks, etc. as the 'bad guys'. They are just like any other business. They are out to make a profit, not loan money to those that really can't afford it. That is why they protect themselves by filing UCC's against you assets, etc.

On a credit card, you can charge $1,000. Pay off $500 and turn around and charge it back. If they really just need to pay off DEBT, then convert the CC to a standard loan that has a fixed interest rate and fixed amortization schedule. People use CC's to pay debts cuz they want to be able to charge more as soon as they pay some off. Or, they hope to get their limit increased so they can go further in debt.

 

[ScreamingEagle]

Fixed rate mortgages is one percentage rate and it doesn't change. There are all kinds of mortgages that do different things; Prime plus 2 percent, interest only, etc.

The CC companies can do whatever they want, as long as it is in their fine print. They can raise your rate to un-godly high amounts (I have seen 33%) if you are even one day late with your payment.

I guess that is what is wrong here. How can banks and financiers get so much power to change rates, min pmts, etc. at their own discretion? This is really going to hurt a lot of people all at once.

And the sneaky bastards changed the BK laws in preparation of this...

 

[GotZoom]

It's called: Fine Print. Supply and Demand.

How badly do you want to borrow money from me? You need $500.00. I will loan it to you provided you pay me $50.00 per week for 12 weeks - you pay back $600.00 for the $500.00 you borrowed.

Now, if you are one day late, you now owe me $750.00. If you are late again, it jumps to $850.00.

Agreed? If you say yes, then so be it. Don't complain because I "did this" to you.

If you don't like my terms, go borrow it from someone else.

Better yet - don't borrow it at all. Save your money until you can pay it off!

This is why you see all these Zero Percent, no payments for 1 year deals with furniture, cars, etc.

Competition. Supply and Demand.

I guess that is what is wrong here. How can banks and financiers get so much power to change rates, min pmts, etc. at their own discretion? This is really going to hurt a lot of people all at once.

And the sneaky bastards changed the BK laws in preparation of this...

 

[007]

When I was in school, my business credit card was my financial savior. I charged up around $5,500 on it. Now that I'm working full time, I don't even carry that credit card with me, and I make either tripple or quadruple payments on it. It will be paid off in another couple months, in less than one year.

When it's paid off, I won't charge anything on it that I can't afford to pay off either immediately, or in a couple months. A credit card is a nice thing to have for emergencies, and to travel with.

People should watch how much credit card debt they carry. I personally know people who make the "minimum payment" each month, and their balance is so high, that all they're paying is a few dollars on the principle, and the rest in interest. If the only way these people can start digging themselves out is for the credit card companys to double the minimum payments, I see that as a good thing. But, some of these people have zero self control. If they get a little room to charge something on their credit card, they'll just go out and do it. So, this double the minimum payment may help some, but not others.

 

[GotZoom]

Here is a site to determine how long it will take to pay off your credit card.

I used $5500.00 at 18%. 323 month until it is paid off making the minimum payment. That is a little over 6 years.

Another reason to pay off monthly or never use them at all!

I have a Visa Checkcard that I get mileage points with. Sweet.

 

[ScreamingEagle]

If you don't pay your debt as agreed, they can jack up your interest rate. They can *gasp* even call your loan!

Loans are just that, loans. They are giving you credit based on what your credit worthiness appears to be. If you fall behind on a home mortgage, credit card, etc., the lender has a right to call in the entire amount. I am sure that there is some kind of grandfather clause that will allow those with existing balances to continue paying as agreed, but then having to pay the new rate on new charges.

We love to ignore how in debt Americans are and paint the CC companies, banks, etc. as the 'bad guys'. They are just like any other business. They are out to make a profit, not loan money to those that really can't afford it. That is why they protect themselves by filing UCC's against you assets, etc.

On a credit card, you can charge $1,000. Pay off $500 and turn around and charge it back. If they really just need to pay off DEBT, then convert the CC to a standard loan that has a fixed interest rate and fixed amortization schedule. People use CC's to pay debts cuz they want to be able to charge more as soon as they pay some off. Or, they hope to get their limit increased so they can go further in debt.

Yes, I understand how it works. I'm fairly saavy about financing myself, but most Americans are not.

One of the major reasons people do not know enough about finance in their lives is that there is a separate "language" that controls the terms of any agreement a person enters into whether it is a mortgage, a credit card, insurance, or a pension. Much like the "language" of lawyers which nobody can understand except a lawyer or a finance professional.

The public is being screwed left and right with regard to credit cards, mortgages, insurances, pensions, etc. because they plain cannot understand what the fine print says. There ought to be a law that forces such agreements to be in plain layman's language. This credit card game is just the latest in a long line of financial games being foisted upon the public at large.

 

[007]

Here is a site to determine how long it will take to pay off your credit card.

I used $5500.00 at 18%. 323 month until it is paid off making the minimum payment. That is a little over 6 years.

Another reason to pay off monthly or never use them at all!

I have a Visa Checkcard that I get mileage points with. Sweet.

I also have a Gold Visa Debit Card from my bank Wells Fargo. It has a daily maximum spending or withdrawl limit of $1,500 on it. I have a $20,000 limit on my business credit card.

 

[GotZoom]

Nice. I had them remove the limit on my check card.

Our insurance business had a CC - it's 20 or 25 thousand also. But we pay that off every month - without fail. We get all those business benefits with it - free meals, mileage, etc.

That is the only reason we have it.

 

[elephant]

Here is a site to determine how long it will take to pay off your credit card.

I used $5500.00 at 18%. 323 month until it is paid off making the minimum payment. That is a little over 6 years.

Another reason to pay off monthly or never use them at all!

I have a Visa Checkcard that I get mileage points with. Sweet.

I am no math wiz, but I think 323 months is over 26 years.

 

[007]

"Remove the limit on your debit card" aye... I might have to look into that.