The Federal Reserve has been pressuring banks to increase minimum payments in order to help consumers pay off credit cards where less interest is being paid and more money goes towards the principle.
Some banks already increased their minimum payment guidelines and consumers are turning to bankruptcy because of this.
These #s are according to the CNN Money Credit Card Calculator and illustrate how fast a consumer will be able to pay off credit cards if they have $50,000.00 in credit card debt. Before the banks increase their minimum payment guidelines. (2011-2012)
Consumer’s plan summary according to the CNN DEBT CALCULATOR SAYS: ($50,000.00 Total To pay off credit cards before the interest rates increase. Credit Card Debt with an interest rate of 20% and paying $1,000.00 per month as their minimum payment)
• By making minimum payments only, it will take consumers 97 years and 5 months to pay off credit cards.
• Based on consumer’s current combined balance of $50,000.00, consumers will pay a total of $219,345.42 in interest to pay off credit cards.
That’s just nuts!
The Federal Reserve is pressuring the banks to increase minimum payments so that consumers can save money in interest and actually pay off credit cards, where they are not paying so much money in interest.
When interest rates increase, that same consumer with $50,000.00 in credit card debt, with a 20% interest rate, will be required to pay $2,000.00 per month as their minimum payment.
CNN DEBT CALCULATOR SAYS:
To Pay off credit cards after interest rates increase from 2%, to 4% of what the balance is. Consumer’s plan summary ($50,000.00 Total Credit Card Debt with an interest rate of 20% and paying $2,000.00 per month as their new required minimum payment)
• By making minimum payments only, it will take consumers 18 years and 6 months to pay off credit cards.
• Based on consumer’s current combined balance of $50,000.00, consumers will pay a total of $33,138.09 in interest.
This is a much better plan to help consumers pay off credit cards, but can all consumers afford this?
The Federal Reserve or the Office of the Comptroller of the Currency wants to help consumers with saving $1,000s of dollars in interest and that is why they are pressuring the banks to increase the minimum payments on credit cards by double. If consumers cannot afford to keep up on their minimum payments, they can find out how to pay off credit cards faster with debt settlement or debt management programs.
Pay Off Credit Cards
