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By STEVEN B. SMITH
If
you
haven’t
received
your
credit
card
bill
yet
this
month,
you
may
be
in
for
a
big
surprise,
especially
if
you
went
a
little
overboard
with
your
holiday
spending.
For
the
estimated
40
million
Americans
who
carry
a
balance
on
their
credit
cards,
their
minimum
payment
may
be
increasing
anywhere
from
40
to
100
percent.
Here’s
a
look
at
why,
and
what
to
do
about
it.
Under
pressure
from
federal
regulators,
credit
card
issuers
are
increasing
the
minimum
monthly
payment
requirement
on
outstanding
balances.
The
change
should
help
consumers
in
the
long
run,
but
it
can
be
painful
in
the
short
term.
Credit
card
minimum
monthly
payments
have
traditionally
been
set
at
an
average
of 2
percent
of
the
outstanding
balance.
The
entire
2
percent
would
often
go
toward
interest,
and
cover
little
or
none
of
the
principal.
According
to
Bankrate.com,
a
balance
of
$8,000
(the
approximate
credit
card
debt
carried
by
the
average
American)
would
take
almost
54
years,
and
cost
an
additional
$22,931.52
in
interest
when
paying
only
the
minimum
2
percent
each
month.
With
the
new
guidelines,
credit
card
companies
are
now
required
to
set
a
minimum
monthly
payment
that
covers
interest,
plus
at
least
1
percent
of
the
outstanding
principal.
Using
those
guidelines,
that
same
$8,000
would
take
only
30
years
to
pay
off
and
cut
your
interest
in
half
to
$11,789.08.
Obviously
30
years
is
still
a
long
time
to
pay
off
credit
card
debt.
Most
people
will
pay
off
their
home
loans
in
less
time
than
that.
All
too
often
I
see
people
treating
their
credit
cards
as
an
additional
source
of
income.
The
key
is
to
pay
off
your
balance
each
month.
According
to a
recent
study
by
the
American
Bankers
Association,
less
than
half
of
cardholders
consistently
pay
off
their
balance
each
month.
The
problem
usually
starts
when
we
have
an
irregular
expense,
such
as
car
maintenance,
holiday
spending
or a
vacation.
We
turn
to
the
credit
card
to
cover
the
difference,
planning
to
pay
it
off
next
month.
But
when
next
month
rolls
around,
our
budget
is
tight
again,
and
even
if
we
don’t
add
to
the
balance,
we’re
unable
to
pay
it
off
in
full.
The
trick
is
to
manage
your
daily,
weekly
and
monthly
spending.
Set
up a
spending
plan
based
on
your
income
and
include
regular
expenses
like
mortgage,
groceries
and
car
payments,
but
also
irregular
expenses
such
as
holidays,
birthdays,
car
maintenance
and
medical
expenses.
By
planning
ahead
and
setting
aside
a
little
each
month
for
these
irregular
expenses,
you’ll
have
enough
to
cover
them
when
they
arise
and
won’t
have
to
turn
to
the
credit
card
to
cover
the
difference.
Most
people
can
easily
squeeze
an
additional
10
percent
out
of
their
paycheck
by
simply
creating
a
spending
plan
and
tracking
their
expenses.
Use
an
online
budgeting
tool
to
make
setting
up
your
spending
plan
simple.
Credit
card
spending
can
throw
an
extra
wrench
in a
budget.
When
you
make
a
purchase
on a
credit
card,
the
money
isn’t
immediately
taken
out
of
your
account,
as
it
is
with
a
debit
card.
By
the
time
the
bill
comes,
you
may
have
already
spent
the
money
elsewhere.
Even
if
all
you
can
do
is
pay
the
minimum,
make
sure
you
at
least
do
that.
Ignoring
the
problem
won’t
make
it
go
away.
It’s
expensive
and
will
take
a
long
time,
but
by
paying
at
least
the
minimum
each
month,
you’ll
keep
the
credit
scoring
folks
happy,
which
can
save
you
thousands
of
dollars
later
on. |
