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Many consumers will be in for a shock when they open their credit card statements in early 2006.
Due to new credit card lending guidelines that have been collectively set by the Board of Governors
of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of
the Currency, and the Office of Thrift Supervision, consumers will soon see a substantial increase
in their required monthly minimum credit card payments.
Because these agencies and federal regulators want to see consumer debts reduced they are forcing
credit card companies to increase required minimum payments by two to four percent beginning in
January 2006. This may potentially double and triple your current credit card payments, which
could have an enormously negative impact on many household budgets. In the past, most credit card
companies required a minimum payment of 2-2.5% of the outstanding balance. However, this new
regulation requires that amount to at least double if not triple. If you have a credit card and
the current monthly payments are $200 to $375 a month for $15,000.00 debt, you will soon be required
to make a minimum payment of $400 to $750 per month. Some banks have even raised their minimums to
5% of the balance owing. If you cannot afford these minimums, as it is now, you will be charged late
fees and finance charges will continue to accrue.
Some banks have already instituted this new policy. Bank of America and MBNA raised their credit card
minimum monthly payments and Capital One has already been in compliance requiring their customers to pay
3% or their balance or $15.00, whichever amount is greater. The rest of the credit card companies and
lenders will follow right behind, with increases taking effect in January 2006.
The goal of the law is to help consumers pay off their debts more quickly. It has good intentions.
However, before any potential long-term positive effects are felt, it may initially send some households
into financial ruin. Already, as a result of the increase, credit card and mortgage delinquencies are on
the rise and seem to be increasing daily. Credit card companies have also already begun to see an increase
in charge-offs as well. Last year there were 1.6 million bankruptcies filed in the United States, often
because people could not afford to pay their minimum payments and were forced into bankruptcy. Now those
credit card minimum payments will be doubling or even tripling.
If this concerns you, and it should, it may be time to get some help. If you are worried that paying your
minimum payments will be a problem, you should seriously think about debt settlement. With our unique
program, you could be out of debt in as little as 12 months, depending on your budget. This is not a
bankruptcy. Click here for a free consultation. One of our highly trained
Senior Debt Consultants will contact you for your FREE, no obligation consultation within one business day.
They will review your particular financial situation and come up with a plan that best fits your needs.
Don't wait until your credit card company raises its rates. Get the help you need, TODAY!
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