Do You Understand The New Information On Your Credit Card Statement?
If you have received your credit card bill for the month already, you may have noticed some changes when you opened up the envelope. Due to the rules for credit card companies recently passed by the federal government, credit card companies are now required to disclose more information to their card holders and the way that they have chosen to provide this information to the consumer is to have the information printed on the cardholder’s credit card statement. There are several new information items that are now included on your credit card statement.
Minimum Payment Information
One of the pieces of information that is now being added to credit card statements is clarifying information about the minimum payment for the credit card. Previously, the only information provided about the minimum payment required by the credit card company was the actual amount of the minimum payment that would be accepted by the company. The cardholder was simply informed that they had to pay at least this amount to keep their account in good standing.
Now, more information has been added to the minimum payment section of the credit card statement. Per the federal credit card rules, the credit card company must now disclose how long it will take to pay off the credit card if only the minimum payment is made each time. Card holders may be interested to learn that paying the minimum payment on a credit card with a $6,000 balance could take 26 years to pay off the credit card, using an example from a recently mailed statement.
The minimum payment information included on the credit card statement will also show how much you are estimated to pay in total for the balance and interest if you choose to pay off the credit card by making the minimum payment only. Using the previous example, by making the minimum payment on a $6,000 balance for 26 years to pay off the credit card, the cardholder would end up paying a total of $11, 127 for that $6,000 in purchasing power. Federal regulators believe that having this information available will help the cardholder make better, more informed decisions about their finances and their use of their credit cards.
3 Year Payoff Information
Another piece of information that has been added to the credit card statements mailed out by credit card companies is what it would take to pay off your credit card in a three year period if no further purchases are made with the credit card. This information is included just under the section that provides information about the minimum payment for the credit card, allowing for an easy comparison between how much would be paid if only the minimum is paid and how much would be paid if the card was paid off within three years. In the case viewed for this article, it was striking to see that paying $119 on a $6,000 balance would result in payments for 26 years with over $5,000 of those payments going to interest, while making a payment of $197 – $78 more per month – would allow the credit card to be paid off in three years with a little over $1,000 going towards interest payments.
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