New rules on credit card minimums...

[can'twait]

I know we've discussed this here before. I saw this news story today so I thought I would share.

http://abcnews.go.com/Business/US/story?id=1457121

 

[dreams91]

I know we've discussed this here before. I saw this news story today so I thought I would share.

http://abcnews.go.com/Business/US/story?id=1457121

So I've heard some places that the minimums are definitely going up and I've heard other places that depending on your personal situation. Anybody know for certain what is happening??"

 

[dvcgirl]

So I've heard some places that the minimums are definitely going up and I've heard other places that depending on your personal situation. Anybody know for certain what is happening??"

It really is going to vary. The best way to know is to call your CC company. Some have gone from 2-4%, others only a percentage, and some won't go up at all. It's up to the CC if they choose to do this or not from everything I've read.

 

[Cheshire Figment]

I believe the rules now require that the minimum monthly payment include the latest interest charges, late (but not overlimit) fees, and at least 1% of the principal. The card company can set higher minimums.

Without these rules in place, for example, if you had a 2% minimum payment, with aan 18% APR you were only paying 0.5% of the principal, and if you had an APR greater than 24% you were not even covering the interest.

 

[disneysteve]

DW saw a really dumb news report on this over the weekend. It started out talking about how the minimum payments were going up and how this would be a struggle for some people who were maxed out on things. But then they went and interviewed a couple that started their own business, a mail box etc. type of place. They ran up their credit cards in the course of starting the business and are now faced with the higher payments. Well, then the reporter went on to explain that now due to the new higher payments, the couple would be forced to cut back on eating out, watch their spending and trim back on their vacations. Well DUH!

 

[luvthatdisney]

Steve~

Some news stories are so ridiculous! I do feel bad for those really stretched thin before the minimums go up. I am not that bad, but a few months ago that was me!

 

[canwegosoon]

DW saw a really dumb news report on this over the weekend. It started out talking about how the minimum payments were going up and how this would be a struggle for some people who were maxed out on things. But then they went and interviewed a couple that started their own business, a mail box etc. type of place. They ran up their credit cards in the course of starting the business and are now faced with the higher payments. Well, then the reporter went on to explain that now due to the new higher payments, the couple would be forced to cut back on eating out, watch their spending and trim back on their vacations. Well DUH!

Did they even mention that instead of being out of debt in the 33 years that it used to be, it would now be 8.3years (1% for 12 months)...there is a good side to this too!!!(for non savers)

 

[mickman1962]

If you can't pay 4% on your credit card balance, you shouldn't have/use one. Yes there are always a few valid exceptions but 99.9% of time it's just people spending more than they make.

 

[disneysteve]

If you can't pay 4% on your credit card balance, you shouldn't have/use one.

I agree. When I go into a store, I think to myself "If I don't have the money for this in my account, I can't afford it." But a lot of other folks apparently think "As long as I can pay the minimum payment on the bill, I can afford this." Hopefully, the higher minimums will make people think a little harder before spending money they don't have.

 

[deltachi8]

Did they even mention that instead of being out of debt in the 33 years that it used to be, it would now be 8.3years (1% for 12 months)...there is a good side to this too!!!(for non savers)

Why would they say that? It wouldnt make for a great story now would it?

Reminds me of a news story I saw about 6 years ago about Priceline. They had about 1/2 dozen people in a room complaining that they were wronged by priceline, how terrible it was. All i kept thinking was these have to be 6 of the dumbest people in the world, none of them actually read a thing about priceline, how it worked, etc. Yet the reporter went after the company for taking advantage of them

 

[hemispheredancer]

We have a BankOne Visa, MBNA Visa, and 1stUSA Visa. We have not received any notices about minimums going up. We have always either paid them off (when feasible) or paid more than minimum due. All payments have been made on time. We haven't noticed any drastic changes that are being talked about.

 

[mommyoeo]

Dave Ramsey rules! Thankfully, we're down to one card left and it wil be gone in April!! Snowball heaven! We're paying much more than 2% since we've rolled the other payments into it. Next, we're paying off student loans and the van. FREEDOM! The hard work and a $75 Christmas last year was well worth it.

 

[dreams91]

If you can't pay 4% on your credit card balance, you shouldn't have/use one. Yes there are always a few valid exceptions but 99.9% of time it's just people spending more than they make.

Well I am an exception. I can afford to pay the balance, etc, however, I choose to put my HELOC onto a credit card with a much cheaper rate (1.9% fixed for the life of the balance) instead of paying the 8 or 9% the HELOC wanted. I still pay well above the minimum, however, doubling it would be a bit much for my budget.

 

[Raevyn_Wolfe]

This reminds me of how mad I get at most Debt consolidation commercials. One of my least favorites is "has life thrown more at you than you can handle" after a scene where a woman acts out a typical over-debted consumer who keeps getting credit card company late payment calls. The set up is she maxed her card out and then was only making the minimum and now can't make the minimum because "things have come up".

I'm sorry, yes, this sucks . . . .been there done that. I just refinanced my house to pay off ALL our cards and loans. I know all about late payments, and debt, and things that come up and I have nothing against debt consolidation, or the companies themselves.

It's just their commercials and those type of "news" stories that REALLY get to me. No, life didn't hand this lady more than she could handle. No one MADE her get the credit card, no one MADE her max it out. She chose to. Credit Card companies are made out to be the big bad guy, but they do disclose all their terms and conditions, before your even get the card, if you didn't like the terms you shouldn't have gotten the card.
It's not like the higher minimum payment rules are helping the credit card company out, if anything it's hurting them since if you play your cards right you will have your card paid off quicker. But, well, there are always the types (like I was) that once a bit has been hacked off the card then it just gets maxed out again.

Sad, but really people need to take a little bit of personal responsibility.
Seems like everyone on this board is though, been getting alot of tips from this board that have actually helped me manage my new found "freedom".

 

[Chicago526]

My understanding is that these new "rules" are not actualy law, but a suggestion only. I got the impresion that the goverment said to the CC companies "look, either you fix this or we'll fix it for you". So to avoid regulation, many of the CC companies are raising their minimums on their own. That's why it varies from bank to bank. The only way to know if or how it will affect YOU is to contact your credit card companies.

Many people have only themselves to blames for their debt (DH and I sure do! ) but I really feel bad for those that needed the cards due to job loss or illness. Especially illness. You can save for unemployment (to an extent), but how many of us can save for a major illness? When DH (before I met him) got sick 4 years ago, he was in the hospital 6 weeks and the total bill was $500,000. That's right folks, half a MILLION dollars. The insurance paid 99% of that, thank heaven! But if he hadn't had insurance? He'd be spending the rest of his life trying to pay that back, or would have been forced into bankruptcy. And if that had happenend today, bankruptcy wouldn't even be an option.

Yes, this change will hurt a lot of people. Some have only themselves to blame, but not everyone. Sometimes life just hands you lemons.

 

[can'twait]

I saw this story again on the evening news last night. Again, the emphasis was how hard it was going to be for people to come up with the payments. They showed one lady who was resigned to paying off her debt for years and years and how it was going to be hard for her to make the new payments. Hello?! They barely mentioned that this is supposed to help people in the long run. Nuts!

 

[dvcgirl]

This reminds me of how mad I get at most Debt consolidation commercials. One of my least favorites is "has life thrown more at you than you can handle" after a scene where a woman acts out a typical over-debted consumer who keeps getting credit card company late payment calls. The set up is she maxed her card out and then was only making the minimum and now can't make the minimum because "things have come up".

I'm sorry, yes, this sucks . . . .been there done that. I just refinanced my house to pay off ALL our cards and loans. I know all about late payments, and debt, and things that come up and I have nothing against debt consolidation, or the companies themselves.

It's just their commercials and those type of "news" stories that REALLY get to me. No, life didn't hand this lady more than she could handle. No one MADE her get the credit card, no one MADE her max it out. She chose to. Credit Card companies are made out to be the big bad guy, but they do disclose all their terms and conditions, before your even get the card, if you didn't like the terms you shouldn't have gotten the card.
It's not like the higher minimum payment rules are helping the credit card company out, if anything it's hurting them since if you play your cards right you will have your card paid off quicker. But, well, there are always the types (like I was) that once a bit has been hacked off the card then it just gets maxed out again.

Sad, but really people need to take a little bit of personal responsibility.
Seems like everyone on this board is though, been getting alot of tips from this board that have actually helped me manage my new found "freedom".

I'm with you about 99%. I'm a huge believer in personal responsibility. If you charge it, you owe it. However, the CC companies are just relentless at times. We "opted out" of any offers for new CC awhile back. We still receive offers for cards all of the time. They definitely prey on the weak....no doubt about that. CC companies hate people like me. I use *them*. I have a few rewards cards, charge *everything* I can on them and pay them off monthly. They don't want people like me. They want someone who is maxed out, paying 28% in finance charges and barely able to make that minimum payment. If that person calls them up asking for another $1,000 to be added to the credit line....guess what, they're going to give it to them.

Also, the new bankruptcy law....guess who the main lobbying force was behind that puppy? You guessed it....the CC companies. It was the most expensive piece of legislation every paid for. Do you think that it is a coincidence that the CC doubled their minimum payments just as this bill was being signed into law? Nope...no coincidence at all.

So, we can't let the CC companies off scott-free. But many people in our nation need a big wake-up call. You must look out for yourself and your famiies with respct to your financial futures. Nobody else cares....

 

[Raevyn_Wolfe]

Oh, I wasn't saying the credit card companies were completely faultless or anything like that. They definitly prey on the weak, etc.
But it's still that weak person's fault for accepting the offer or calling them for a credit limit raise, etc.
I get so many card offers too it's rather annoying, but I shred them before I even open them. No one makes you open the offer and accept it.

There are always exceptions to every rule, like another poster said, there are injuries, etc. But it seems that most of the news stories and ads are targeted to your typical over-debted consumer that made bad choices. . .and well I don't have any pity for them. (except for myself, when I was one ofcourse, lol)

I've since cleared my debt and do like you do. I got an Citi dividend card (though how I qualified I have no idea, lol) and use it for everything I would normally use my check card for, and I write it all down in my check book register that way when the bill comes I just pay it all off and it's already taken out, and that way I know I don't overspend. These were all hints I got off of this message board.

 

[disneysteve]

we can't let the CC companies off scott-free.

Actually, the CC companies are just taking full advantage of the rules handed to them by Congress when they deregulated the banking industry. That's when all the trouble started. In the past, pre-deregulation, if you wanted to borrow money, you had to prove to the lender that you had the means to repay it and there were legal limits on the interest rates that could be charged. Getting a credit card was actually somewhat difficult.

After deregulation, everyone and anyone could get credit even if they had no job and no income (college students are the best example of this). Interest rates skyrocketed and we got to our current situation.

I'm all in favor of personal responsibility, as you all know, but the legal allowances afforded the banks and credit card companies are absolutely obscene.

 

[Lulu's Mom]

I do agree that it is personnal responsibility and I also agree and think that the CC companies and the banks need more regulations. For example between two of my CC my credit limit is $23,000 I never asked for an increas, they just kept coming and on top of that I was a full time student and wroking part time. Explain to me why on earth the banks would allow a limit so high for someone who has such a low income

It is very easy for people to get in trouble and not even realize it until it is too late and with banks doing things like I mentioned above it is no wonder why there is so much debt in this world.