Credit Card Minimum Payments to Increase Soon

To try and save us from ourselves, the Office of the Controller has recommended that credit card companies make their customers pay higher minimum payments, up to double the current amount. This will affect at least 7% who currently only pay the minimum and those who can only afford to pay a small portion over the minimum.

These days the average consumer has 4-6 credit cards and $ 8-20 thousand dollars in credit card debt and rising. Paying only the minimum and never charging again will keep you in debt for 30-60 years, depending on interest, late fees and over limit costs.

The guidelines to raise the credit card minimum were made in 2003, but the banks and credit card companies wanted some time to ease into it. Some say, they waited until the new bankruptcy laws were in effect, so they would have less to lose. There's no set date when your credit card company will start increasing your minimum payments, just know they will and probably soon. Some already have. I have read dates from July to October of this year and many thought it was going to happen last year, so be warned.

What can you do, if you will not be able to afford this increase?

You can contact your credit card companies and see if any will work out a lower payment for you on a temporary basis. Keep in mind that frequently, when you have payment arrangements like this, they will not let you use your credit card, so keep at least one available for emergencies.

You can hire a debt consolidation company to get a personal loan for you and pay off all your credit cards. Personal loans usually do not have very low interest rates, like a home equity loan or refinancing your home. If you do not think it will take you too long to pay off or you do not own a home, this may be the way to go. You can also hire these people to make payment arrangements for you or charge off some of your debt. Be careful here, any debt that they get "charged off" for you will show that way on your credit report, lowering your credit score dramatically, and you will have to pay taxes on the charge off amount as income.

One solution, including trying to curb your spending, is to either get a home equity line of credit or refinance your home. The interest rates are lower than a personal loan or credit card and spread out farther, so you will pay a much lower monthly payment. You always have the option of paying more than the minimum when you can afford to.

If your debts are moderate, but you may need more in the future for home repairs, my suggestion would have to go with the home equity line of credit. Get approved for a little more than your debts and expected home repairs, so you will not have to worry about getting another one for a while. Try to pay more than the minimum whenever you can without risking your cash flow.

If you have a lot of credit card debt, home repairs that need to be made, an unstable job or other situation that could make matters much worse at any time, you should probably consider refinancing. If it's been at least a year or more since you purchased or previously refinanced your home you probably have enough equity, depending on where you live of course. Also, if you've been making your payments on time for the past year or more, you'll have a good payment history and should have a good enough credit score to get a decent rate.

If you have late payments, you still may want to consider refinancing at a higher rate, as a temporary solution. Your interest rate will probably be much less than your credit card interest, so you'll pay a lower monthly payment and not risk ruining your credit or worse, losing your house. If you pay all your bills on time for the following 1 to to 2 years, you can refinance again to get a better rate.

If you think that the rise in credit card minimum payments will affect you adversely, try to make a decision on what you are going to do about it soon. The longer you put it off, the harder it will be to deal with in the future.

Credit Card Debt Settlement Letter – 'How To'

Writing a credit card debt settlement letter can be scary but if you write your credit card debt settlement letter properly, you can eliminate much of your debt. Let's discuss how to write your settlement offer properly so you achieve success.

To begin, a credit card debit settlement letter is as the title suggests, a letter that you write to your creditors in which you negotiate for or request that they settle your reduce the balance of what you owe. The credit card company then responds with an offer of settlement, in which they will agree to a payment plan or to forgive a portion of what you owe, this will be their counter offer.

The negotiation for the settlement of your debt will continue until you reach an agreement with your lender. It is common for the card company to settle a half to two thirds of your debt in order to settle the account. The lenders, for accounting purposes would rather walk in most cases than to continue to hound you for any delinquent accounts.

You will want to write your debt settlement letter and negotiate in writing with your credit card company so that you document any offers they make from start to finish. Avoid negotiating over the phone with your credit, but if you do, make sure that they fax any offer directly to you so you have documentation.

When writing your credit card debt settlement letter be sure to follow these guidelines for success:

  • Begin your debt negotiation very low, do not worry about being outrageous, they will counter your offer and you never know, they might accept.
  • Make it very clear to your creditor that you intend and wish to pay your debt, but are unable to, detail your hardship, and communicate with them as they are more willing to help than you might expect.
  • Check your debt settlement letter for spelling and grammar errors, and write as clearly as possible.
  • There is no need to sound 'legal,' it is OK to sound like an average person and not a lawyer, just clearly state your purpose with the letter.

There are services that can help you with your credit card debt settlement letter if you do not wish to do it yourself. Attorneys can help and they are knowledgeable and it can be beneficial to consult an attorney, but they are expensive, and for smaller debts it is not necessary.

How to Answer a Summons For Credit Card Debt

When a stranger hands you legal papers – READ THEM and do not avoid them. To avoid being served legal papers only delays the inevitable and can cause more harm than good. Even if you have not been properly served, you can still appear in court and argument this point. However, keep in mind that just about every court will allow the person who filed the law suit, a chance to correct this technical error.

A collections law suit for credit card debt includes a Summons and Complaint and it is important to read these documents thoroughly. You'll only have a limited time in which to respond, generally 30 days, to the law suit, so it's important to take action quickly. If you choose to do nothing, the creditor will obtain a default sentence against you and gain the ability to levy your bank account, garnish wages and lien property you may own with that judgment.

If you decide to fight the law suit, here are some VALID defenses:

  • Service in not proper (check your court rules on proper service of a law suit)
  • The Statute of Limitations has run (This varies by state; California has a 4-year statute of limitations on written contracts)
  • You do not owe the debt or this is a case of mistaken identity

If you owe the money, here are some steps you can take immediately upon receiving a summons:

1. Call the law firm representing the creditor and negotiate a settlement that may include a payment plan;

2. If you can not afford the repay this debt and you have other debts, consider that filing bankruptcy could save you time and money in the long run and completely eliminate this debt and stop the law suit.

If you DO NOT OWE the money, or you think the law suit is part of a scam to defraud you, I recommend hiring an attorney immediately. In such extreme cases, a consumer protection lawyer may take these cases on a contingency fee basis, which is to not charge you up front for fees where you may have other causes of action for a counter law suit for violations of the Fair Debt Collections Practices Act, Fair Credit Reporting Act, or if you previously filed bankrupt and discharged this debt, then your case can be reopened to sue the creditor for trying to collect on a debt when they are no longer allowed due to your bankruptcy discharge order.

The Importance of a Credit Report

Your credit report in combination with your credit score is as important as the air you breathe. Without it, you won’t stand a chance or survive in the United States. To most of the country, you are just a number in conjunction with a credit history. It does not matter whether you are good person, volunteer, lie or cheat. It only matters how responsible you are with your personal finances.

The simplest way to find out about your credit history is to order a copy online. You want a website that provides you with information from the three major credit bureaus;Experian, TransUnion and Equifax. These bureaus analyze your financial decision making; both past and present, and put that information into a report. A good website to use that provides this information is It only costs $1 to check and can provide you with invaluable information compiled into a credit report. Your report will not only provide your current credit score, but also your entire credit history.

A credit report acts as your credit references. A positive credit history tells potential lenders that you manage your finances well, i.e. borrow money and pay it back in a timely manner. A negative credit history tells lenders you have a difficult time managing your finances and instead are in debt, often not repaying them as agreed.

Credit reports help you by providing you with your personal financial history. This may include attempts at fraud made by others at your expense or errors made by varying lenders. The report can also provide you with information on good or bad decisions you may have made in the past. By staying up-to-date with your financial history, you can ensure you are making good choices, have the ability to detect if someone is committing identity theft and ensure there are no errors.

In addition, a credit report can explain why you were not approved for a certain loan or line of credit. Even though you had a great or excellent credit score, you still had a negative item or charge back on your credit report, so the financial lender refused to approve you.

You can also see how fast your credit score can be transformed. If you go ahead and start repairing your credit, you can watch how fast negative items can be removed and how fast you will gain points putting your score from bad or below 600 to above 700.

If you are not happy with your current FICO score and/or credit history or find there are errors in the report, you can contact a credit repair company. The credit repair company can boost your credit score, remove negative items and/or dispute errors on your behalf.

Source by Lori Askins