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Higher minimum payments on CCs? What happens next?


urbankitty
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Hi,

I heard a report on NPR yesterday about CC minimums going from 2% up to 4%. So, the minimum would be double what consumers are paying now. Apparently the new reg takes effect after January 1.

Anyone know anything else? If the bank ups the minimum to 4% does that mean one is paying down his / her debt faster? Or will the interest rates go high enough to obliterate the dent the higher minimum might have on the debt?

Thanks

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That's old news. That was part of the BK reform act, no longer can creditors string along customers for years paying only interest with the minimum payments so yes if you have high balances then the minimums will double.

Frankly if you can only afford minimum you have a lot more serious problems.

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Yeah, it is pretty much old news. And Grim is right, that if you can only afford the minimums, then you are already in deep [EXPLETIVE DELETED] so this is not something as terrible as some have depicted it to be.

Too many subprimes have advertised for like electronics, computers, etc, that your payment is ONLY ten or twenty dollars a month. Gee, anybody can afford that... Like afford that for the next 20 years.

This reduces some of the predatory lending practices.

It is perhaps not the best way to directly eliminate the screw jobs from sub primes but it is a reasonable start. And yes, people are going to get hurt but it was their huge debt load that created this in the first place.

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I know this is going to sound really odd coming from me ... but ...

[climbing on soapbox]

This so called economic recovery is and has been bogus for the past 10+ years, sans the reality check in late 2001 and all of 2002. The economy is growing along with consumer debt because the lenders have tapped out their prime customers. The prime customers are aware of the lenders tactics and don't run balances and lenders don't make money. The subprime crowd live paycheck to paycheck and "WOW! I can get this TV for only $10 per month!". The subprime folks are why the RTO's do so well. Now the lenders go to Washington and get their well paid congresscritters to pass BK reform because now the people are screwing their stockholders off with massive amount of BK .. never mind the fact it was those same lenders who lent money to people in the 1990's that in the 1980's or previous would never have qualified for that much credit because they saw it as high interest cash cows and mostly they were. However a few BK's (in comparison to the number of accounts) and they go crying for BK reform. Now we have BK reform and thankfully someone in Washington was watching and put their foot down on these minimum payments that string debtors along for years and years. I know the following opinion won't go over well in this crowd [are you lurking Robert Nashville??], but maybe these lenders should tighten up on who gets credit and who doesn't, but imagine the "economic impact" of suddenly having half of your subprime customer base not being able to spend like they were because the credit has tightened up. That's why we won't see things change with the subprimes anytime soon.

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Thanks.

I'm not worried about paying double the minimum as I usually do anyway. Really I'm more interested in whether the 4% minimum gets one closer to paying off the debt faster.

And I am also p.o.'d at our hideous lawmakers who are hell bent on keeping those who are struggling from EVER getting ahead, while the rich get a cake walk because they can afford to buy legislation. :evil:

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And I am also p.o.'d at our hideous lawmakers who are hell bent on keeping those who are struggling from EVER getting ahead, while the rich get a cake walk because they can afford to buy legislation. :evil:

Nobody is holding a gun to your head demanding that you buy that television for $10 a month...

That is just one side of the issue in which the media and popular culture only discusses. There are plenty of "other" sides of the same story.

For instance, we live in a materialistic and consumer driven society. Even poor people and paycheck to paycheck people want to have that new TV and other material goods that they really cannot afford but the predatory lenders loan out the money anyways...

Materialism is rarely discussed in most of the news stories. And popular culture glamorizes it.

As a result, people still want to have things that they really cannot afford.

There is a lot of fault to go around.

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