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#432917 - 10/03/05 06:24 PM CC Charges
Sound Tactic Offline
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Starting in October CC companies will be moving their minimum payment from 2% of balances to 4%. Although I think this is a supurb idea, I feel for those who will be spread thin by this change.

Thoughts?
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#432918 - 10/03/05 07:21 PM Re: CC Charges
Sound Tactic Offline
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:bump: Lets discuss something non-political. Or, is this all George Bush's fault (since according to the media everything is his fault)?
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#432919 - 10/03/05 07:33 PM Re: CC Charges
Tesla Offline
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Quote:

Starting in October CC companies will be moving their minimum payment from 2% of balances to 4%. Although I think this is a supurb idea, I feel for those who will be spread thin by this change.

Thoughts?




This is the second time I heard this and was wondering where it is coming from? Is it part of the new bankruptcy stuff?

Anyway, the last person who asked me about it sees it as a big refinance boom potentially for debt consolidation.
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#432920 - 10/03/05 07:34 PM Re: CC Charges
Sound Tactic Offline
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That is a good point.
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#432921 - 10/03/05 07:53 PM Re: CC Charges
A_G Online
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I just got this amendment from MBNA...
The new total minimum payment due is calculated as follows:
1. 1% of your balance (your New Balance Total except for any new periodic rate finance charges and late fee), plus
2. new periodic rate finance charges, plus
3. new late fee.

So it appears that from this amendment (I admit I dont know how it was calculated before) one will have to pay new finance charges and hit some of the principal on the loan. I'm not sure if that would equal about 4%, but I have also heard the 4% "rumor."

Does anyone else have any insight into this?
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#432922 - 10/03/05 07:59 PM Re: CC Charges
Princess Leia Offline
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Maybe your issuer is going to 4%, but the major issuers are doing what AuditGuy says (1% + FC + any late fees, NSF fees, etc). If you pay your bill on time, your minimum payment amount should drop since most issuers were around 2.5% before the change.

Do a search, there have been recent threads in the banker forums about this.
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#432923 - 10/03/05 08:06 PM Re: CC Charges
rainman Offline
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The regulators (OCC, FDIC, FRB, OTS) put out guidance ( Guidance in the beginning of 2003 indicating that they were going to start looking for minimum payment requirements that amortize the balance over a "reasonable" period of time, consistent with the fact that cards are unsecured consumer debt. Lots of banks are just now getting around to making changes to meet this regulatory expectation.

In the MBNA example, if your rate is 18%, then the monthly interest would be 1.5%, plus 1.0% principal, for a total of 2.5%.
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#432924 - 10/03/05 08:06 PM Re: CC Charges
Sound Tactic Offline
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wow, I did not know that. Then what is the point of the whole thing.
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#432925 - 10/03/05 08:50 PM Re: CC Charges
GuitarDude Online
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Quote:

I just got this amendment from MBNA...
The new total minimum payment due is calculated as follows:
1. 1% of your balance (your New Balance Total except for any new periodic rate finance charges and late fee), plus
2. new periodic rate finance charges, plus
3. new late fee.

So it appears that from this amendment (I admit I dont know how it was calculated before) one will have to pay new finance charges and hit some of the principal on the loan. I'm not sure if that would equal about 4%, but I have also heard the 4% "rumor."

Does anyone else have any insight into this?




This essentially means that it will take 100 months (8 yrs 4 months) to pay off your CC balance if you never use the CC again during that time (1% of principal per month). That is still pretty scary and is a TON of interest.
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#432926 - 10/03/05 09:06 PM Re: CC Charges
Anonymous
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That actually is not very much higher than the old MBNA minimum payments. I worked at MBNA until about 3 months ago, so I'm familiar with the old way . Previously there were 2 ways they calculated it and they charged them the lower amount :
1. Monthly finance charge + $15 + Fees
2. 2.25% of the balance
The one situation where it is a big difference is on 0% intro rates where previously it would only be a $15 min. payment no matter how high the balance, and that would get alot of people into trouble using more than they could afford so this new way would definately be better for avoiding that problem.

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#432927 - 10/03/05 09:11 PM Re: CC Charges
ThePaul Offline
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^ that last post was me, forgot to log on
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#432928 - 10/03/05 09:23 PM Re: CC Charges
Beagles22 Offline
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State of confusion
Our bank is going to 4%. We just decided a week ago and have our vendor sending out the notices. We're trying to be proactive on this one.
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#432929 - 10/03/05 09:25 PM Re: CC Charges
Sound Tactic Offline
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Is the concept behind this new policy to reduce consumer debt? I am just curious because this is the first I have heard about this.

Thanks
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#432930 - 10/03/05 09:26 PM Re: CC Charges
Beagles22 Offline
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State of confusion
I think so. It's an attempt to help them pay off their debt earlier and to keep them from maxing out their CC's with the idea of 'buy now and pay later' because the 'later' they pay the more it ends up costing them in interest.
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#432931 - 10/03/05 09:31 PM Re: CC Charges
Sound Tactic Offline
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Thanks Beagle
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#432932 - 10/03/05 10:11 PM Re: CC Charges
'Lil Freak! Offline
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The psych ward
Personally, I also think it's a good idea. But if some consumers are going to be spread too thin by the credit card payment increases, what happens when their ARM payments or HELOC payments are raised due to an increase in the prime rate? Throw in high gas prices and higher home-heating costs, and I think there may be trouble....
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