Minimum Payments on Credit Cards Going Up
An article in today’s Boston Globe (BugMeNot) let’s us know the following:
Under pressure from federal regulators, credit card issuers are raising the minimum payments consumers must make on their monthly bills.
Keep an eye on those statements if you’re paying the minimum only on a card while working off a higher interest card, you might have to arrange to redirect your budget to make a new, higher minimum payment.
Also note:
Consumers will have to check with their own credit card issuers to determine the new terms on their cards because banks and financial institutions are adopting a variety of formulas to comply with the federal guidelines.
Bank of America Corp. in Charlotte, N.C., for example, had a minimum payment of 2.2 percent on some of its cards. Last year, it raised the minimum payment to $10 plus all fees and interest.
“We’ll be making additional changes later this year that will result in the reduction in the length of customers’ repayment periods,” said Bank of America spokeswoman Betty Riess. She said the details still were being worked out.
At Citigroup Inc. in New York, the minimum payment has been set at all finance charges and fees plus 1 percent of the outstanding balance, according to Citigroup spokeswoman Elizabeth Fogarty . A similar formula is to be phased in at MBNA Corp. of Wilmington, Del., starting with new accounts in the third quarter and existing accounts in the fourth quarter.
I recommend reading the full article for hints on how this could effect you as a customer and what potential actions you might consider.
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