[Maflynn]

I heard on the radio, one of those ubiquitous debt consolidation/reduction commercials and at the end, they warned to act now before your minimum payments go up.

I'm not one for believing these types of commercials but that struck a chord with me. I've googled it and found nothing about any possible increase. Anyone else know of any sort of law that will increase your minimum payments or was this just a scare tactic?

[Big Mac]

They're talking about delinquent accounts, and they want to sell you their debt solution.

[Maflynn]

Oh ok,

I remember a few years back that minimum payments did increase and I was wondering if that was the case again

[Big Mac]

Nope, I've heard those commercials - pure sales pitches.

[Art Vandelay]

It is not in the credit card companies' interest to raise minimum payments.

[turtle777]

Originally Posted by Art Vandelay 

It is not in the credit card companies' interest to raise minimum payments.

This is true for the most part.

In most cases, it will have adverse effects; either the defaults will go up, or people will pay off faster than before and minimize the revenue stream.

However, a higher minimum payment could mean that your interest rate was adjusted up. Then they would need to recalc the rate.

-t

[Art Vandelay]

That's what I meant. They aren't interested in raising the percentage of principal that is paid by the minimum payment.

If you're worried about your minimum payments going up, you're already in trouble. You should never just pay the minimum.

[Laminar]

I've never seen a minimum payment of more than $10 on my credit card, but then again I always pay off the full balance immediately.

[OldManMac]

Originally Posted by turtle777 

This is true for the most part.

In most cases, it will have adverse effects; either the defaults will go up, or people will pay off faster than before and minimize the revenue stream.

However, a higher minimum payment could mean that your interest rate was adjusted up. Then they would need to recalc the rate.

-t

Defaults are beginning to go up quickly. The average American owes almost $9000 in credit cards, and $27 billion was defaulted in 2007, which is projected to rise to $96 billion by next year.

[Eug]

$9000 per American? Ouch.

What's the median amount?

[Railroader]

Which one of you lowlifes has a $18,000 balance, cause I am at $0.

[ort888]

I think they went up a few years ago from 2% to 4%. A lot of people were in a panic or something... I'm not sure if it happened or not. I never really pay attention to my minimums. I either pay it all off right away or in a couple months if something big is on there. Either way, I never pay the minimum.

[Eug]

2005: Good news, bad news: credit card minimum payments rising (Page 1 of 2)

Under pressure from federal regulators, MBNA, Citibank, and Bank of America have announced they are increasing minimum monthly payments on credit card balances and others are expected to follow suit in the near future. To some cardholders that could be seen as a good thing. To others it could be devastating.

If you can handle the increased payment it's good. Let's face it, if you pay only a 2-percent minimum each month, your debt would probably last longer than most marriages. Hiking your minimum might put you back on the financial straight and narrow. Ostensibly designed to help consumers get out of debt faster, the increased minimums will force cardholders to pay off fees, interest and at least a portion of the principal each month.

But if you simply can't make that increased minimum month after month, it could put you and many other debtors in over your head.

Over the past few years, low minimum payback rates of between 2 and 2.5 percent have encouraged Americans to spend, spend, spend -- and to rack up an average credit card debt of close to $10,000 per household. For the estimated 40 percent of cardholders that carry a balance from month to month, the low minimums free up cash. But paying off a big charge little by ever-so-little also means that a $1,000 debt can turn into a 22-year commitment -- and that you'll accumulate thousands more in interest in the meantime.

[Rumor]

I just received a letter from Capital One stating that they were increasing the minimum payment. Considering I never pay the minimum, I disregarded it.

[Uncle Skeleton]

Originally Posted by Railroader 

Which one of you lowlifes has a $18,000 balance, cause I am at $0.

It's funny, because I do have just about $18,000 on cards, all of it at 0% interest. I often wonder when I hear those scary big numbers of all Americans' debt, how much of that figure is at terms that are actually advantageous not to pay off (lower than inflation)? It would be more informative to know the amount of interest paid, than to know the amount actually owed.

[Art Vandelay]

Last I heard, the average interest rate for credit card debt in the US was about 14-15%. People floating a balance on a 0% interest card is not the norm.

[Rumor]

Originally Posted by Art Vandelay 

Last I heard, the average interest rate for credit card debt in the US was about 14-15%. People floating a balance on a 0% interest card is not the norm.

It can be done easily by signing up for a new card, transferring the balance, then canceling the old card.

[Art Vandelay]

I know how it can be done but that is not the norm. Plus, you can only do that for so long. Doing that degrades your credit score and the lower it gets, the harder that is to achieve.

[Doofy]

Originally Posted by Railroader 

Which one of you lowlifes has a $18,000 balance, cause I am at $0.

[Andrew Stephens]

Here in the UK, credit card companies have started getting court orders for possession of defaulters homes, even though credit cards are pushed as unsecured loans. The small print allows card companies to apply through the courts for possession orders. Except that the UK government is now removing the requirement for the card companies to get a court order, thus transforming all UK credit card debt into secured lending (in effect) just when people are beginning to really struggle.

Any repossessions won't show up in the official figures since this new secured debt is not actually secured debt (eh). Hardly anyone in the UK (population or media) has noticed this yet but I suspect it will start to play big as the recession bites.

[Doofy]

Originally Posted by Andrew Stephens 

Except that the UK government is now removing the requirement for the card companies to get a court order

!

Got a link? (I'm not disbelieving you, but could just do with something solid to share with other peeps)

[Railroader]

Originally Posted by Uncle Skeleton 

It's funny, because I do have just about $18,000 on cards, all of it at 0% interest. I often wonder when I hear those scary big numbers of all Americans' debt, how much of that figure is at terms that are actually advantageous not to pay off (lower than inflation)? It would be more informative to know the amount of interest paid, than to know the amount actually owed.

I think I am paying 12.3% on my $0 balance.

Good luck with your credit score.

[Maflynn]

Originally Posted by Art Vandelay 

Last I heard, the average interest rate for credit card debt in the US was about 14-15%. People floating a balance on a 0% interest card is not the norm.

I get 0% offers nearly daily. Most of them are temporary for balance transfers but even then, the offers I've been getting do not even come with any fees associated with transferring the balance.

I'm not one for opening credit cards and moving balances around willy-nllly but so far the credit crunch hasn't slowed the influx of junk mail from the banks

[Big Mac]

Originally Posted by Railroader 

Good luck with your credit score.

No need to make the guy feel bad about that, but reducing debt as quickly as possible is a good thing.

[Eug]

Heh. We already had this credit score discussion in another thread.

[Laminar]

Originally Posted by Eug 

Heh. We already had this credit score discussion in another thread.

Only one other?

[Zeeb]

Originally Posted by Maflynn 

I get 0% offers nearly daily. Most of them are temporary for balance transfers but even then, the offers I've been getting do not even come with any fees associated with transferring the balance.

I'm not one for opening credit cards and moving balances around willy-nllly but so far the credit crunch hasn't slowed the influx of junk mail from the banks

I get those too but read the fine print. Although its at 0% interest for a certain amount of time they now charge you a percentage of the transferred balance. That about makes up for any lost finance charges for the length of the promotional 0% rate.

[Big Mac]

Originally Posted by Eug 

Heh. We already had this credit score discussion in another thread.

I didn't see that thread, but in my experience (as opposed to RailRoader's statement), those who have debt should be less concerned about their credit score and more concerned about paying things off. A high credit score may hurt some of those with debt because it gives people without the means to pay existing debt off the opportunity to get even more loans.

[Maflynn]

Originally Posted by Zeeb 

I get those too but read the fine print. Although its at 0% interest for a certain amount of time they now charge you a percentage of the transferred balance. That about makes up for any lost finance charges for the length of the promotional 0% rate.

Reread what I say, I've been getting ones without the transfer fee. I can move my credit card debt from card A to card B and it will not cost me anything.

I suppose they bank on the idea that you'll be late one payment or after the alloted time, the rate will skyrocket.

[ort888]

That strategy may have worked in the past, but I have a feeling that the endless stream of 0% credit card offers will dry up for just about everyone... if they haven't already.

[Uncle Skeleton]

Originally Posted by Art Vandelay 

Last I heard, the average interest rate for credit card debt in the US was about 14-15%. People floating a balance on a 0% interest card is not the norm.

That doesn't tell us much. It could still be split evenly between 29% and 0%, or 25% and 5%. You can't blame anyone for holding on to debt that's <= inflation.

[Person Man]

Originally Posted by ort888 

That strategy may have worked in the past, but I have a feeling that the endless stream of 0% credit card offers will dry up for just about everyone... if they haven't already.

Nope, they haven't dried up at all. He got an offer in the mail the other day with his credit card bill... Here are checks to use to pay off other high-rate balances at 3.99%!*

* There will be a transaction fee of 3% of the balance transferred.

He wanted to pay off the home equity loan with that and save 4% off the interest rate of 6% that he has... hmm... with a 3% fee that made it a very bad deal. Good thing I told him about the fine print. But Mom wouldn't have let him do it without her... her name is on the equity line too.

As for me, I only have two sources of debt: my mortgage and my medical school student loans.

My mortgage is a traditional 30 year, at 6.6%, and I'm on track to have it paid off in a total of about 16 years because of prepaying aggressively. I bought my house as a place to live in, not as an investment so I'm not worried about values going down. I plan to live in this house for quite a while.

My student loans were ~$160K when I consolidated in 2004 back when rates were at their lowest, locking in a rate of 3%, which, with direct debit and a special deal made by my medical school with Sallie Mae, is currently down to 1.75%. Can't beat that, so I'm just making minimum payments on it for now. Once my mortgage is all paid off I'll start prepaying on the student loans.

I financed my last car purchase with a 5 year loan. Paid it off in 18 months, and I plan to drive it into the ground before getting another one, for which I'll pay cash.

I haven't carried a balance on my credit cards for two years, and when I did, it was only for one or two months. I'll never carry a balance again.

I have a 12 month emergency cushion of cash if I lose my job (Since general internal medicine doctors are in short supply practices are falling all over themselves to recruit them... I wouldn't be out of a job for long).

[Andrew Stephens]

Originally Posted by Doofy 

!

Got a link? (I'm not disbelieving you, but could just do with something solid to share with other peeps)

From last Sunday's Sunday Times:
The rate at which the courts have granted charging orders has increased sharply in the past two months, according to Citizens Advice, National Debt-line and the Consumer Credit Counselling Service. Last week a homeowner posted a message on a website saying a credit card company had launched a charging order against him for a debt of £1,000.

From next year banks will be given further arbitrary powers because they will no longer need to secure a county court judgment against a defaulting debtor. They will be able to move directly to seek a charging order after two or three months of missed payments.

linkee

[Railroader]

Originally Posted by Railroader 

I think I am paying 12.3% on my $0 balance.

Good luck with your credit score.

I got two offers in the mail today for balance transfer offers of 0%. Should I take it?

[Laminar]

Take both of them1!!1

[Dakar V]

They'll be handy for transferring your balances of $0 from other cards.

[Eug]

Whenever I used to get those offers, there'd be a maximum balance transfer / cash advance charge of $10.

3% is highway robbery, like those cash chequing stores on the corner.

[Railroader]

Originally Posted by Eug 

Whenever I used to get those offers, there'd be a maximum balance transfer / cash advance charge of $10.

3% is highway robbery, like those cash chequing stores on the corner.

The mob/mafia is going legit.

[Person Man]

Originally Posted by Eug 

3% is highway robbery, like those cash chequing stores on the corner.

"Cash checking" stores? Don't you mean "check cashing?"

At any rate, Check Cashing stores charge like 300% interest.

[Uncle Skeleton]

Originally Posted by Person Man 

Nope, they haven't dried up at all. He got an offer blah blah blah

"he" who?

[Eug]

Originally Posted by Person Man 

"Cash checking" stores? Don't you mean "check cashing?"

At any rate, Check Cashing stores charge like 300% interest.

Doh!

BTW, kind off topic...

I was in one of those cash che... errr... cheque cashing shops a few years ago waiting to buy a money order. The idiot black woman in front of me tried to cash a cheque with the ID of a white woman. At first she said she was this woman but then when the cashier refused, she said she was given permission by the woman to use her ID.

I'm convinced a turnip would have scored higher on an IQ test.

Just a little story I thought I'd share...