2005 June 24 | Wheatworks Blog: Financial Matters

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Archive for 24th June 2005

Your Minimum Monthly Payment Will Double

6/24/2005, 4:00 pm

You probably won’t hear it from your credit card company until the very last minute, but you better get ready for a shock. Your minimum monthly payment will double from 2% to 4%.

In practical terms, if you owe $10,000 in credit card debt and have been making the minimum payment of $200, you will soon pay $400 per month. In a broad effort to reduce consumer debt, the Office of the Comptroller of the Currency asked banks to increase minimum payments due. In general, this will be a good thing for most people.

A 2% minimum payment is barely enough to reduce one’s balance and can lead to incredibly long repayment terms. Make minimum payments of 2% and you can spend 40 years paying off a credit card. Increase the minimum payment to 4% and some of the balance disappears with each payment.

However, this increase will really hurt a lot people who have been struggling to make the 2% minimum payment.

Learn more from this article at CreditShack.org

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