July 19, 2019

Math Proves Credit Card Debt Almost Impossible to Repay

My colleague, Houston attorney Pamela Stewart, recently posted on her blog this interesting table that shows just how long it would take to pay off credit card debt if you make only minimum payments.  If you have been sending in only minimum payments and you have a hunch that you have paid your debt two, three, even four times over, you may just be right.

This table assumes a 2.5% minimum percentage payment, and an absolute minimum payment requirement of $10.00 per month at an interest rate of 17%.

 

 Amount Owed Time Required to Pay Off Debt Total Interest Expense
 $1,000 12 years $979
 $5,000 24 1/3 years $6,210
 $10,000 29 years $12,745

 

Credit Card Minimums Rising – a Taste of Things to Come?

According to a news report from Bankrate.com, MBNA, Citibank and Bank of America have announced that they are increasing minimum monthly payments on credit card balances from 2% to 4%.

Clearly the credit card companies understand that the forthcoming change to the nation’s bankruptcy laws will leave more and more people unable to turn to bankruptcy as a way out of crippling unsecured debt. With bankruptcy soon to be unavailable to many middle class wage earners, there is no reason for credit card lenders to worry that raising the minimums.

What other surprises can we expect from banks and lending institutions?

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