Sunday, Nov. 01, 2009

Credit card companies boosting payment requirements

A number of credit card companies have issued notices to cardholders carrying balances that minimum monthly payments are being re-calculated - which means they're headed higher.

That minimum is as high as 2 percent of the balance, which for a $50,000 balance means a monthly payment of $1,000.

That can be triple what minimum payments used to be.

For cardholders who budgeted minimum payments, that throws them off budget, and in some cases now unable to pay their credit card minimums.

The solution to this problem isn't easy. Either pay the new minimum or face a damaged credit report and lower credit scores.

A cardholder can try to shop for another card - perhaps one offering balance transfers at a lower introduction rate that could allow the cardholder more time to save up for higher payments.

For homeowners who have enough equity in their home to borrow from, a home equity line of credit can be a good source of funds to pay down or pay off credit cards. In addition, the interest paid on a home equity loan is tax deductible, while credit card interest is not.

- McClatchy-Tribune

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