In a recent survey it was found that although the rules on minimum payments on credit cards have not changed, the way people pay their debt off has.
Most card issuers have kept the minimum level of monthly repayment low as by allowing people to make a small monthly repayment the credit card company can gain a lot more money through interest payments as it will take longer for the customer to pay off their bill.
In 2003 the federal regulators brought in guidelines that meant that credit card companies had to offer a minimum payment level and most card companies set their levels at 1% of the outstanding balance plus any interest incurred that month and any fees payable.
Although in a recent survey conducted at the start of 2012 we found that although some card issuers had raised their minimum monthly percentage by a small amount most have remained the same.
The one thing that has been noticed is the way in which people pay their credit card debt, a lot more people are taking the decision to pay more than the minimum monthly payment and this is in part due to the financial penalty of only paying the minimum amount.
After all by paying the minimum amount each month you will end up paying a lot more in interest than if you pay off the balance or at least a big chunk of it. It can take anywhere between ten and twenty years to pay off a credit card debt if you only pay the minimum amount.
There are no guidelines for banks to set their minimum monthly tariff so this leads to each individual bank setting their own minimum payment amount. Although most are the same in that you will be required to pay a small percentage of the outstanding balance plus interest and any fees accrued during the month. Most card issuers will also state that if the outstanding balance is $15 or less then the amount must be paid in full.
U.S Bank was the ones who made the biggest change since the last survey in 2008. They now state that the minimum payment on their credit cards should be 1 percent of the balance or paid in full if the outstanding balance is $30 or below, plus any late fees or fees for being over the credit limit.
In these uncertain economic times more and more people are looking to reduce their debt and this means the end of paying the minimum payment on their credit cards in order to save on interest payments.