Don’t be surprised if you open your credit card bill next month and find that your minimum payment has doubled. The government recently required credit card companies to increase minimum payments to cause consumers to pay off balances faster. That amount on the bill may look overwhelming, but consumer debt counseling experts are helping even those on tight budgets successfully integrate the higher payments into their household finances.
With higher minimum payments, explains debt counselors from Consumer Credit Counseling Services (CCCS), a Clearpoint agency, consumers will able to pay down their credit balances in potentially half the amount of time.
Here’s an example: Say you owe $1000 with an 18% interest rate. Under the old guidelines, making minimum monthly payments would take 19 years to pay off your balance, including the whopping $1,931 in interest. At the new higher rates, paying it off will take about 7 years with only $515 in interest. CCCS’ consumer debt counselors offer tips that can help any household adjust its finances to take advantage of these markedly shorter payoff times.
Clearly, quicker payoff times can have a big effect on American households which have, on average, 14 credit cards . The average consumer has $8,600 in credit card debt, and according to the American Bankers Association, 58% of cardholders don’t pay off balances in full every month.
If you’re struggling to handle an avalanche of bills and need help structuring a long-term plan to manage your debt, consider consulting with a trained consumer credit counselor. Using their financial knowledge and unbiased approach, credit counselors can examine and make adjustments to a household budget. With an objective eye, your counselor can frequently spot several ways consumers can save money and decrease monthly spending.
The bottom line? Don’t let the minimum payment hike push you into a corner. By seizing control of your household finances now, credit counselors point out that you can leverage this increase to work in your favor. When structured properly as part of a household budget plan, it’s an excellent opportunity to quickly pay off balances and get out of debt.
For help managing your credit card debt, call 800.750.2227 (CCCS) to make a free credit counseling appointment. Or, get started now online.