What an amazing substitute for self discipline!
There will be lots of people, that have budgeted for their current payments, that will end up defaulting, then their interest rates will go up......this is a revenue generator for the credit card companies.
Get ready for all replies about how Credit Card is paid off in full each and every month...
Your minimums should double.
Most minimums are set so that the principal can never be paid off.
Rule: NEVER pay minimum.
Rule 2: Pay off the card every month. It is a debt, not a friendly convenience center.
Oh No ... 2 x $0.00 = $0.00
"If, like many Americans, you've been incurring credit card debt based on being able to afford the monthly minimum payment.."
Let me finish that sentence: "You deserve what you get".
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
Easily solved. Don't use cc or pay them off every month.
Pay it down to zero every month.
Then, it doesn't matter what they charge.
Myself and my wife have 20K to clear. We are starting Dave Ramsey's Financial Peace this month.
www.daveramsey.com
Only if my spending doubles. :-)
I can understand unexpected expenses, but how in the world could the AVERAGE be 10,000? There has to be a lot irresponsible people out there.
My pet peeve is the fact that our schools do a piss poor job, if they even do it at all, of educating kids on personal economics, especially when it comes to credit cards. Of course if parents would do a better job of this, then that would not better. But I think if the purpose of education is to prepare people for life, this is one of the most important lessons that needs to be taught.
Generally, the best way to avoid credit card debt is to not get married. Most wives have no concept of money when the plastic is available. (Putting on asbestos suit.)
IMO, if you do happen to carry a balance, shop CC offers of less than 10% fixed APR's for the life of your loan and set up automatic drafts to pay the bill before the due date(s) in case you happen to forget one. Set up a checking account with overdraft protection if you're one who runs their checking account balances to the minimums because it's far better to let the overdraft protection kick in than to get stuck with 24.9% plus interest. With a $10,000 balance, the difference from 18% to >10% - preferrably less than 8% - could mean a difference of complying with the new law under the current payment schedule and your payments doubling.
But, what do I know?
Good, no excuse not to pay them off quicker.
I rarely ever used credit cards, but about three or four years ago, I stopped compeletly. I use my debit card, or cash. Of cousrse there are times when buying airline tickets, rental cars, etc a card is necessary. My debit card is also my CC. The only consumer credit item I owe in a mortgage. It's a great feeling not to have payments.
Damn, I pay off my CC's every month. Does this mean I'll have to pay double the amount I owe?
Take your interest rate and divide by 12. Then add 1 to that number. Your minimum payment will equal that number in percentage terms.
Examples at 18% (18/12) = 1.5 add 1 and you get 2.5% an increase from the original 2 or 2.2% of your balance.
At 12% (12/12) = 1, add 1, you get 2%>
At 6%, (6/12)= .5, add 1 and you get 1.5% a significant drop from the current 2 to 2.2% of the balance.
If your rate is less than 6%, your minimum is still 1.5% of the balance.