Tuesday, June 07, 2005

Raising the Minimum Payments

So have you heard yet? I hate to be the bearer of good/bad news but banks are starting to raise the required minimum payments from 2% to 4% every month. Currently, my minimum payments are approximately $383...soon they say my minimum payments will double to a whoppin' $767.28! Not that I mind or anything. I already pay more than that every month anyways. But I live at home and don't have to pay any rent and have a full time steady job. I feel bad for all those people living paycheck to paycheck who are struggling to pay just their minimum every month.

So far, Bank of America, Citigroup, Discover Card, and MBNA are among those planning on raising their minimums. JPMorgan Chase plans on experimentng with higher minimums later this year on a small portion of its customers.

I'm sure this will be great for most people as they will end up paying less interest overall. I was reading an interesting fact that a $10,000 balance at 18% would require about 58 years to pay off and cost $28,930.64 in interest at the 2% minimum payment rate. If the minimum payment were 4%, it would take 15 years to pay off and cost $5,915.67 in interest... a savings of over $23,000.

For now, lets just hope that nothing major happens that would stop me from being able to pay nearly $800 a month on my credit card. I guess quitting my job is definitely out of the question now. Damn.

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CPT PYRO said...

OUCH, I am just hoping they don't do this on my sears card!

zandperl said...

Wow, you really seem up on what it takes to get out of debt! I'm going to have to read the rest of your blog and see if you say how you got into it in the first place.

I just got a new job with a raise of $8,000, but $5,000 of that goes to health insurance. I also moved out from having a roommate to living by myself, and the leftover $3,000 raise neatly seems to be exactly the increased expenses of living on my own. *whew!*

Best wishes.

Dr Robert J Lahm Jr said...

Chase has indeed raised its minimum payment from 2% to 5%. It has also imposed a new $10/month "finance charge." The change in terms notice provided no "opt out," other than paying off the entire balance and closing the account by January 1, 2009. (for me, that would mean coming up with approximately $12,000.00). The notice came in my last month's statement, which arrived around the first of the month in December (2008). In my case, I am fighting this as hard as I can for several reasons. The overall reason is that Chase promised a "fixed rate," but has changed that rate by adding a finance charge and was deceptive in its advertising (known as bait and switch). I have written a letter to the CEO of Chase Card Services, which is posted to my protest site, ChangeinTerms.com (see the "About" page).