Rising Minimum Payments: Friend or Foe?

Have you noticed your credit card minimum payments moving up and up? If so, you may be asking yourself why this is happening. And, you might be upset at suddenly having to cough up more money each month to pay toward your credit card bill. But, the change is actually one that was made to help you rather than hurt you.

Recently, credit card companies have been under a great deal of pressure by Legislators to increase their minimum payments. Traditionally, minimum payments have been computed by determining 2% of the total outstanding credit card balance. Unfortunately, paying only 2% of the debt each month is usually only enough to pay the finance charges and any other fees that you may have required over the month. Essentially, paying only 2% means you are not paying down your balance at all.

So, while it may upset you to have to pay more each month toward your credit card balance, it is actually a blessing in disguise. By paying 4% of your balance, you are at least chiseling away at the debt that you owe (assuming you are not adding new purchases to your debt). So, instead of still owing $5 for that fast food meal you placed on your credit card thirty years after the purchase was made, plus a huge amount of interest for carrying the balance, you will find yourself ultimately debt free and paying cash the next time you have a craving for a hamburger.

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The Financial Dominance of the Credit Card Industry
Keeping Your Credit Card Safe
Traveling With Your Credit Card
A Look at Current Bankruptcy Laws
Fixing Mistakes on Your Credit Report
Flying With Credit Card Airline Miles
Get Stylish with Your Credit Card
Keeping Your Credit Report Clear
Modern Day Vending Machines
Using Pre-Paid Credit Cards for College Students
Making Sense of the Prime Rate
Protecting Your Credit Card Account Information
Reasons to Use a Credit Card Instead of Cash
Rising Minimum Payments: Friend or Foe?
Staying Out of Debt While Using a Credit Card
Pay Your Way Out of Debt with Your Tax Refund
Tips for Shopping Online With a Credit Card
Understanding Airline Miles Credit Cards
Understanding Cash Back Credit Cards
Understanding Prepaid Credit Cards
Understanding Rewards Credit Cards
Understanding Student Credit Cards
What to Look for in a Credit Card
What to Watch Out for in Pre-Paid Credit Cards