SILVER SPRING, Md. (TheStreet) — Citigroup
Most banks raised interest rates before the CARD Act took hold Feb. 22, offsetting more stringent regulations designed to protect consumers. But Citigroup, Bank of America and other card companies were required to tell their customers how long it would take to pay off the balance with the minimum payment.
"It appears from where we sit to have achieved its intended effect," says Gail Cunningham, vice president of public relations at the National Foundation for Credit Counseling in Silver Spring, Md.
CARD Act-related rule changes mean that paying more than the minimum balance is more cost-effective than ever. The Center for Responsible Learning recently reported that paying more than the minimum could save a customer as much as two dollars for every dollar paid. The report detailed a scenario in which a consumer carried a balance for purchases and cash advances, the latter of which are assessed at higher rates. Before the CARD Act, the report said, paying $100 more than the minimum balance could save a customer $164 in interest charges. Savings now could amount to $224.