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Kim Johnson ReportingThe minimum payments you make on your credit cards are about to double, if they haven't already. The increase is in response to federal guidelines.
Federal regulators are requiring credit card lenders to increase the minimum payment to four percent of the balance. Some of the country's BIG banks, like Citibank and Bank of America have already raised their minimums from two to four percent. Other institutions will have to comply by 2006.
Consumer advocates say although it might hurt up front, the change is in the best interest of consumers over the long haul.
Eva Rees, Utah Dept. of Financial Institutions: "If you're going to have a credit card debt, if you want to pay it off in four years that's certainly preferable to twenty or thirty years that you might pay on one at the minimum payment of one or two percent."
Rees says it's just not good practice to let consumers pay 30 years on a credit card. If you're already having trouble making your minimum payment, and won't be able to pay the increased one, contact your credit card company and see if you can negotiate a lower interest rate.
