Credit Cards Minimum Payments about to double

Your Credit's The October Surprise 2005
by cskendrick
Sat Aug 20th, 2005 at 16:33:41 CDT

It shouldn't be a surprise. I mean, after all, people have had months to prepare. There's no shortage of articles in the Internet about it.

And it's for your own good. Just ask the guys who sponsored the legislation.

But that's just it; come October, all minimum payments for credit cards must be quoted for a 10-year paydown. That's roughly 4% of your outstanding balance.

Most credit cards quote the minimum payment for a 20-year paydown. That's 2% of your outstanding balance.

* cskendrick's diary :: ::

Sur-prise, Surprise, Surprise!

It won't be just college kids and retirees on fixed incomes who are sandbagged, either. Many small business owners use personal credit cards as cash flow management tools. Likewise persons who work for commission, or have seasonal cash streams (skilled and unskilled laborers, for example).

Banks are already budgeting for massive defaults, on the order of tens of thousands of cardholders. It might not be nearly enough.

It promises to be a nightmare for millions of surprised working- and professional-class families.

It also promises to be a nightmare for issuers of credit cards, because what is about to happen to the consumers could scare them out of using cards at all in the short run.

"Your Credit Card Payment Just Doubled"

From the outset, there seems to be question if banks really are doubling their rates at all. From what I have been able to tell, some people would prefer that cardholders be surprised -- after the new bankruptcy laws become effective on October 17 of this year.

The reasons are not purely remunerative; some just like the idea of debtors being disciplined, which in fact is the purpose of the credit reforms.

The problem is that the reforms come simultaneously with a strengthening of the bankruptcy laws, insofar as creditors are concerned. And those who lend funds to those who want them are calling the shots this time around.

Daily Kos: Your Credit's The October Surprise 2005


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