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.
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.
