Doubling of the minimum payments on CC's???

[atiyeh]

Wasn't it supposed to go into effect in October?

 

[FoBoT]

I read it that it's only a recommendation, not mandatory.

 

[imported_JoePa]

Mine already did.

 

[dullard]

Banks are required to increase the minimum payment in order to ensure credit card debts are paid in a reasonable time. The increase must occur by Jan 1, 2006. However, I don't think any company is required to double the minimum payment. It must be increased by up to double.

 

[Vic]

Oddly enough, this law was designed for consumer protection. At only 2% of the balance, it would take decades to pay off a credit card by applying only the minimum payment. By merely doubling that payment to a 4% of the balance, it takes only a few years, saving time and thousands of dollars in interest charges. The bad news is if you already have a bad debt habit.

edit: And oh yeah, people will know this now. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which is taking effect and requires these increased minimum payments, also requires that every credit card bill include a warning show how long it will take to pay back the debt if only the minimum payment is made. Look for these next month.

 

[Baked]

I doubt it'll change the way people will behave when making CC purchases w/ insufficient fund in the bank to back it up.

 

[pontifex]

doesn't bother me any anyway, because i always pay 3-4 times the minimum payment, if not more.

 

[FoBoT]

http://www.clevelandfed.org/bsr/Conditions/v6n4/Bankruptcy.cfm

Credit Card Minimum Payments
There are some reports that claim BAPCPA mandates credit card companies to increase monthly minimum credit card payments to 4 percent from around 2 percent. Although it is true that credit card issuers have, or are, in the process of increasing required minimum monthly payments, it is not a result of the new bankruptcy laws. Instead, the credit card industry is responding to interagency credit card lending supervisory guidance issued by the Federal Financial Institutions Examination Council in January of 2003. That guidance does not specifically require credit card issuers to increase minimum monthly payments to 4 percent, but it does spell out that banking regulatory agencies ?expect lenders to require minimum payments that will amortize the current balance over a reasonable time period.?

The new bankruptcy law does amend the Truth in Lending Act to require enhanced minimum credit card payment disclosures. Issuers must include a ?minimum payment warning? that informs customers that only meeting the minimum monthly payment increases the amount of interest paid and length of time needed to repay the balance. To illustrate the point, the warning must include a hypothetical example and a toll-free number for customers to call to get an estimate of the time needed to repay outstanding balances making only minimum payments.

 

[Vic]

The OCC is mandating the minimum payment increases.