Credit Card Minimum Payments

I was reading a news story today regarding how some credit card companies are increasing the minimum payment percentage. Historically most credit card companies have required at least a 2% of your current balance as the minimum payments. Some such as Chase are going to increase the percentage to 5% of the current balance.

Now this is good and bad. The good part is it will eliminate the 30 years to pay off a credit card and save a lot of interest. Most credit cards if you pay the way they set the payment schedule could take up to 30 year to pay off a small $3,000 balance. That's the good news.

The bad news is if you are currently living paycheck to paycheck you may not be able to make the payment. For example, say you owe $5,000 times 2% would be $100. The new payment would be $5,000 times 5% equal to $250.

I'm not sure how many people could afford an extra $150 today or any time without some planning ahead of time. If all of a sudden you open your next bill and you see your new minimum payment doubled or tripled it would probably effect your budget.

As I said in my book that being debt free is key to reaching your financial goals. However, not if you did not plan for such a large increase. This is definitely something you need to be aware of on your next couple statement. Chase is a large company and I can see more credit card companies following their lead.




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