May 12, 2010
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News: Americans Accelerate Payments
Americans are giving back a bigger chunk to the credit card companies according to a recent survey. The National Foundation of Credit Counselors (NFCC) report indicated that 25 percent more cardholders are paying more money over the required minimum payment due than they did three months ago. The NFCC polled 2,000 credit cardholders and found that 55 percent paid the minimum balance due. Most state economic reasons for not paying more than the minimum. The report also indicated that only 12 percent of the respondents paid their credit card balance off in full each month.
The purpose of the NFCC poll was to see how credit cardholders felt about the new legislation that went into effect on February 22, 2010. Of the 2,000 respondents, 12 percent said they solicited the help of professional credit counselors. One of the provisions of the new Credit CARD Act is the mandate that card companies must print credit counseling agencies contact information on the account statements. Banks are also now required to give cardholders information on how long it will take to pay off their card balance if they continue to pay the minimum amount due. It appears the provision has been effective with the increase in cardholders paying balances down more quickly.
The NFCC says that prior to the recession, cardholders sought out credit counseling because of poor debt management; today, it's to learn how to reduce credit card balances more quickly. The report also showed that prior to the enactment of the new CARD Act, paying an additional $100 toward the balance saved the cardholder $164. Today that same amount would save the cardholder $224 because the increase in interest rates. Cardholders have the new law to thank for that. It requires card companies apply any extra payment over the minimum payment due be applied to the highest bearing interest balance. Most likely most of the lenders aren't real pleased over the provision since most of them pushed interest rates up prior to the law's enactment in anticipation of millions of interest rate income.