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The Federal Soldier Government have been pressuring credit card companies such as as MBNA, CitiBank and Bank of America to duplicate the minimum payment they will accept from cardholders each month.

This agency that if your minimum monthly payment was calculated last twelvemonth at the rate of 2% per month, it may soon go 4%. However, it's hard to state when you will actually see this increase, as the assorted credit suppliers are upping their minimum payments at different modern times over the approaching year. This agency you won't cognize for certain about any addition until it demoes up on your monthly statement.

What will this make in terms of you existent monthly payment? If you have got a credit card where the minimum monthly payment last twelvemonth was $200, it could easily travel to $400 a calendar month sometime this year. Worse yet, if you have got got balances owed on respective different cards, you could get slammed for an extra $300 or even $500 or more than per month!

What's the good news?

The good intelligence is that doubling the amount you must pay each calendar calendar month reduces the clip that volition be required to pay off that credit card debt, and the amount of money it will take to pay it off.

For example, say you have a credit card with an interest rate of 12% and a monthly minimum payment of 2%. In this case, it will take you 368 calendar months to pay off your credit card debt – Oregon about 30 and one-half years!

Now, take this same credit card with the same interest rate, but dual the minimum monthly payment to 4%, and what happens? You reduce the number of calendar calendar months required to pay off that $10,000 in credit card debt to 151 months or about 12.5 years.

Of course, you don't desire to do just the minimum monthly payment every month, calendar calendar calendar month after month if you can possibly avoid it. Here's an illustration of what I mean. Suppose you charge a $6,000 sail and never do more than than the monthly minimum payment of $400 (4%). If the card you set it on carries an interest rate of 12%, it will take 134 calendar months to pay off that sail – Oregon long after all those golden sail memories have got faded.

So, if your credit card supplier makes double your monthly minimum payment this year, it may ache a batch in the short run. But in the long run, it will salvage you money and assist you.