Pending Law on Credit Card Minimum Payments
Tuesday April 24, 2007
The Credit Card Minimum Payment Warning Act, which aims to accomplish exactly what the name suggests, has been in the works for a few years. It recently gained the support of several consumer groups including the Consumer Federation of America and the Consumers Union, among others.
If passed, the act will require credit card companies to disclose information about the impact of making only the minimum payment. This includes how long it will take to repay your credit card and the extra amount in interest you’ll pay when you make only the minimum payment.
I like the idea. Anything that allows us to make better decisions about paying our bills is wonderful. Whether or not the act passes (and I hope it does), I want consumers to be more empowered to make these kinds of calculations on their own.
You don’t have to be a math whiz to calculate the minimum-payment only impact; websites like Bankrate.com have tools you can use. So until credit card companies are forced to give you this information, you can easily figure it out yourself.
If passed, the act will require credit card companies to disclose information about the impact of making only the minimum payment. This includes how long it will take to repay your credit card and the extra amount in interest you’ll pay when you make only the minimum payment.
I like the idea. Anything that allows us to make better decisions about paying our bills is wonderful. Whether or not the act passes (and I hope it does), I want consumers to be more empowered to make these kinds of calculations on their own.
You don’t have to be a math whiz to calculate the minimum-payment only impact; websites like Bankrate.com have tools you can use. So until credit card companies are forced to give you this information, you can easily figure it out yourself.
Comments
I like this, but why stop there? Why not also include a disclaimer IN PLAIN ENGLISH about how interest is calculated? There are so many people out there who don’t know what Average Daily Balance means and think that if you pay half of your bill at the due date that you’ll only be charged interest on the balance.
Having a disclaimer that paying your credit card bill in full (and on time, of course) will not hurt your credit score would be nice, too, but I highly doubt that this would ever be included because the credit card companies love to charge interest and don’t seem to have a direct connection to Fair Isaac & Co.