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Saturday, September 17

By the end of this year, credit card issuers will begin raising minimum payments

It's kind of funny to read Newsday and see the former lead guitar player of the first punk band I played in back in '79 talking about credit card issuers raising the minimum payments by the end of the year. But it's not surprising to see a Long Island musician being interviewed as the musicians I know are so deeply in debt, I don't know how they sleep at night. Oh wait, most of them don't sleep at night. My friend had a good day job though but he is still concerned about paying more:

"It would impact my ability to function as an allegedly middle-class person in this ever-changing world," said Ball, 52.

Well yes, being in credit card debt up to one's eyeballs and the minimum monthly payments doing little if anything to pay off the debt is rather normal around these parts. While it's a good idea for credit card usuersissuers to set up credit card debt as something a person would eventually pay off, this may strangle an awful lot of people who are lucky to make the minimum payments every month. It would have been nice if the companies had set this up from the very beginning. From the Newsday Article:

Right now, many credit card issuers require consumers to pay at least 2 percent of their outstanding balances, but that soon will change as regulators try to ensure that debtors pay off cards more quickly.

Here's how the change will affect cardholders who owe $10,000 at a 13 percent interest rate.

IF YOU PAY . . . Time to pay off debt Interest paid
2 percent 33 years, 2 months $11,451
4 percent 12 years, 10 months $3,664
$400 a month 2 years, 6 months $1,726

33% Don't use credit cards
39% Pay off their balance in full each month
28% Make extended payments

Of those who make extended payments, 40 percent pay the minimum each month.
40% Pay only the minimum
37% Pay less than half but more than minimum
17% Pay more than half the balance

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