NewsChannel 11 first told you last month to keep a close eye on your credit card statements, your minimum payments will likely be doubling. If your credit card company hasn't already hiked payments, here's some insight on when they will: Bank of America and Citibank have already started increasing minimums. We're told Discover, U.S. Bancorp and MBNA have all announced time tables for changes to occur over the next four months, some as early as this Friday.
The payment hikes are an attempt to help you pay off your credit card debt quicker. The federal government is requiring all credit companies to re-structure payments so that debt is paid off in a reasonable amount of time. Crystal Gomoke with Consumer Credit Counseling Services explains, "They have not said specifically what a timely manner is but most credit card companies take that to mean 10 to 12 years. Right now an average pay off time is between 34 and 40 years."
Bank of America was one of the first to make the change and they're also one of the first to feel the effects. Even though they started with small increases, they've already had a significant amount of cardholders default on their accounts.
Changes are made at the discretion of each credit card company so effective dates vary. You can call your credit company's customer service line for specifics. One of the credit companies we checked with gave a very different response from the others. MBNA and Citibank were very up front. Discover, on the other hand, denied knowing anything about the government mandates or anything about payment changes. We did call Discover back a second time and the next representative said there may be changes she just didn't know what yet.
If you carry a significant balance and have a hard time making the current minimum payment, now is time to start planning for the hike.
Consumer Credit Counseling Service tips to help prepare for larger minimum credit card payments:
Credit Card Minimum Payments to Double
Pressure from the federal government is forcing credit card companies to double the minimum monthly payments they require by the end of this year. If you're one of many who carry a balance from month to month, it's a double edged sword.