Paying Card Debt
A third of all credit card customers are paying upwards of 20 percent interest, and some as much as 41 percent, according to Vermont Senator Bernard Sanders, an independent.
Sanders had hoped to cap card rates at 15 percent, but his proposal was voted down on Wednesday.
It’s hard to know for sure if that’s bad news for card holders. The card industry generally argues that any restrictions will lead to fewer cards being issued, hurting customers.
But other customer-protection proposals are moving through Congress. One would prohibit issuers from raising interest rates on existing balances unless the customer is at least 60 days behind in payments. The debt would return to the old rate once the customer had made on-time payments for six months.
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While issuers would be free to raise rates on new charges, they’d have to give 45 days notice, allowing customers time to shop for cards with lower rates.
If card rates are going to stay high, it pays to double up on efforts to pay down your debts, or to avoid them in the first place.
The first step is to recognize just how expensive these charges are. Because minimum monthly payments are so low, it’s all too easy to put that at the back of your mind.
Burrow into the fine print on your card contract and you’ll find how the minimum payment is figured. These days, many card issuers set the level at 4 percent of the balance.
Use BankingMyWay.com’s Credit Card Minimum Payment calculator to see how this works.
