In an attempt to save us from ourselves, the Office of the Comptroller recommended that credit card companies pay their customers higher minimum payments, up to twice the current amount. This will affect at least 7% who currently pay only the minimum and those who can only pay a small part of the minimum.
Nowadays, the average consumer has 4 to 6 credit cards and $ 8 to $ 20,000 in credit card debt and is growing. Paying only the minimum and never charging again will keep you indebted for 30 to 60 years, based on interest, late fees and excess costs.
The guidelines for increasing the credit card minimum were made in 2003, but banks and credit card companies wanted a little time to fix it. Some say that they waited until the new bankruptcy laws were in force, so they would have less to lose. There is no fixed date when your credit card company will start increasing your minimum payments, know that they will and probably soon. Some already have. I read the dates from July to October of this year and many thought it was going to happen last year, so be forewarned.
What can you do if you can not afford this increase?
You can contact your credit card companies and see if they will allow you to get a lower payment for you on a temporary basis. Keep in mind that frequently, when you have payment arrangements like this, they will not let you use your credit card, so keep at least one available for emergencies.
You can hire a debt consolidation company to get a personal loan for you and pay all your credit cards. Personal loans do not usually have very low interest rates, such as a home equity loan or refinancing your home. If you do not think it will take too long to pay back or you do not own a home, it may be the way to go. You can also hire these people to make payment arrangements for you or charge a portion of your debt. Be careful here, any debt that they get "charged" for will show you this way on your credit report, lowering your credit score dramatically, and you will have to pay taxes on the amount of the charge as a returned.
One solution, including trying to reduce your expenses, is either to get a home equity line of credit or refinance your house. Interest rates are lower than a personal loan or a credit card and spread further, so you will pay a much lower monthly payment. You always have the option to pay more than the minimum when you can afford it.
If your debts are moderate, but you may need more in the future for home repairs, my suggestion should go with the home equity line of credit. Get approved for a little more than your debts and scheduled home repairs, so you will not have to worry about getting another one for a while. Try to pay more than the minimum whenever you can without risking your cash flow.
If you have a lot of credit card debt, home repairs that need to be done, an unstable job, or another situation that could make matters worse at any time, you should probably consider refinancing. If it has been at least a year or more since you bought or refinanced your home, you probably have enough equity, depending on where you live, of course. In addition, if you have made your payments in time for the past year or more, you will have a good payment history and should get a credit rating high enough to get a decent rate.
If you have late payments, you can still consider refinancing at a higher rate as a temporary solution. Your interest rate will probably be much lower than that of your credit card, so you will pay a lower monthly payment without risking ruining your credit or worse, losing your home. If you pay all your bills on time for the next 1 to 2 years, you can refinance again to get a better rate.
If you think that rising minimum credit card payments will affect you negatively, try to make a decision about what you are going to do about it soon. The more you delay it, the more difficult it will be to face the future.