January 24, 2009
Whats up with the low minimum balance of credit cards?
jason j asked:
I cannot believe that people are required to pay like 4% of their balance for each statement. I think that is too low, no wonder people use their credit cards like its a debit card. I think the government wants people to buy things they do not need so that they can get more tax revenue since they know most people are not even going to pay back a quarter of their balance each month. I think it would be nice if the minimum balance was like 20-25% of your balance that way people would only use their credit cards for things they need but they cant afford right now and it would reduce personal debt. At the end of the day its up to the individual to responsible with their spending but the government isn’t helping by regulating such a low minimum payment.
I cannot believe that people are required to pay like 4% of their balance for each statement. I think that is too low, no wonder people use their credit cards like its a debit card. I think the government wants people to buy things they do not need so that they can get more tax revenue since they know most people are not even going to pay back a quarter of their balance each month. I think it would be nice if the minimum balance was like 20-25% of your balance that way people would only use their credit cards for things they need but they cant afford right now and it would reduce personal debt. At the end of the day its up to the individual to responsible with their spending but the government isn’t helping by regulating such a low minimum payment.
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Comments on Whats up with the low minimum balance of credit cards? »
First of all, the government should not be in charge of every little economic detail in peoples’ lives. However, a couple of years ago a new law was passed by Congress that required credit cards to RAISE the amount of minimum payments just to avoid predatory lending by credit card companies.
Low minimum payments are extremely profitable for credit card companies. They charge interest on the unpaid balance, and a low minimum payment necessarily leaves a higher unpaid balance on which interest accrues. The thing to remember is that it’s a minimum payment – no one prevents you from paying off more – if not all – of your balance.