subject: Credit Card Relief – Why Paying The Minimum Payments Is Not Your Best Option [print this page] Much as all unsecured revolving loans contain their own readily apparent snares - elevated Annual Percentage Rates being only the most obvious - the sneakiest gambit of credit card debt lenders has long been the minimum monthly payment. The tradition of paying just the bare minimum has likely been around for as long as the entire concept of credit cards (and credit card debt burdens). Still, now more than ever, minimum payments for credit card debt accounts have become an absolute blight upon the finances of average Americans as they struggle to meet just the regular household budgetary demands. Especially in times of economic turbulence, the difficulties of satisfying bills can too easily lead to a complete avoidance, conscious or unconscious, of the rising credit card debt burdens the account holders must one day tackle.
This is the devil of minimum credit card debt payments. After all, even if you're fully aware of the potential risks involved with borrowing funds on credit card debt balances, it's just human nature to separate the thousands of dollars owed with the infinitesimal monthly stipends demanded by the unsecured lenders. If you're thinking that the minimum monthly payments seem to stay the same size or even diminish while the credit card debt amounts grow ever larger, you could well be right! Many of the lenders have slowly brought down the portions of the credit card debt repaid through minimum payments until just one to two percent of the total would be affected each month, depending upon the creditor.
Even if you know in your heart that the credit card debt amounts are helplessly increasing towards amounts you'll find it nearly impossible to pay back over the near future, it can be extremely difficult for consumers untrained in finance to fully understand just how little of their minimum monthly stipends actually goes toward paying down the total sums owed. With the consequences of towering credit card debt amounts becoming ever more costly for the nation as a whole - corporate charge offs of personal credit card debt unlikely to ever be compensated have skyrocketed and Chapter 7 bankruptcies have doubled in less than a decade - the federal government finally decided to take action. Legislation from the end of last year, spurred on by the administration of President Obama, forced changes to how the lenders are allowed to illustrate minimum payments in terms of the credit card debt billing statements each creditor sends out.
Unlike previous years, in which the billing statements would show little more than the minimum amount that the borrower must pay as well as the total credit card debt obligations, the creditors now have to specify just how long it would take to satisfy the larger sum through monthly minimums. Furthermore, in an especially dramatic presentation intended to alert borrowers as to the true dangers of their purchasing habits, the billing statement will also now demonstrate the amount of money it would take each month to completely satisfy the outstanding credit card debt in just three years.
If this was meant to shock and horrify households into immediately changing their shopping behavior and permanently altering their relationship with credit card debt, it seems to have done its job. Reversing the patterns of almost twenty years, credit card debt holdings of United States households actually began to shrink over the past year. It's too early to see whether the new Congressional statutes regarding credit card debt and minimum monthly payment notifications on billing statements will have any lasting endurance, but, for the first time in a long while, things seem to be headed in the right direction.
Credit Card Relief Why Paying The Minimum Payments Is Not Your Best Option
