Minimum Payment Increase on the Horizon

June 20, 2005-- Posted at 9:45 PM CST
JONESBORO-For most people that have credits cards, the story is always the same; it is much easier to spend than it is to payoff. The enticement, the ease of using the plastic just makes life simple. But getting your finances in trouble is what they tend to do.
Warren O'Daniel said, "I am in the process of paying them all off because I don't want anymore of this high debt that you can accumulate on the credit cards."
That's is why the federal government has mandated that all banks raise their minimum monthly payment from 2% to 3% by the beginning of 2006.
Lets say for instance you are $10,000 in debt. Your minimum monthly payment will now be raised 50% from $200 to $300.
Natalie Moss of Liberty Bank, says her bank already charges 3% and because of that, her company has an higher number of clients paying off their debt monthly.
Moss said, "The majority of our customers pay off their debt each month with the bank. But we do have some customers who make their minimum payments each month."
And minimum monthly payments are how banks make their money because interest is still paid on the remaining balance. Some think these minimum payments are used as enticement to get uneducated consumers a plastic piece of the real world.
Luann Higgins, Jonesboro resident, said, 'When my children all entered college, they got bombarded with credit card offers and at that age, most of them didn't have a job. It just surprised me that they could even get a credit card offer."
Natalie Moss says, parents let your kids know, don't be fooled.
Moss said, "Those type of companies are known for sending credit card teasers in the mail and I think that they are just out for the money."
Some think that the new mandate will not do any good.
Higgins said, "3% is not a whole lot. I still think that you are going to see younger people using their credit card more when they really need to be educated."
And so here is a good rule of thumb. Use credits cards with great care and use them only for what you really need.