Atlanta Bankruptcy Lawyers See Silver Lining in Rising Minimum Payments
We've all heard the saying when life gives you lemons, make lemonade. Well, how about this one: when credit card companies give you higher minimum payments, make the decision to reduce debt for good and find a financially-secure future.
OK, so it doesn't quite have the same ring to it as the old lemonade adage. But it's the same idea. When life throws you a curveball - something seemingly negative - find out how to use it to your advantage.
Credit card companies have been raising minimum payments to help defray the costs of increasing defaults and to offset new regulations. At first glance, a higher minimum seems like bad news. But it's really not. See, credit card minimums have recently averaged about 2%. That means that on a $1,000 credit card bill, you'd only have to pay $20. Not that painful, right? Think again. With an average APR of 15-30%, you're not even covering interest. So not only are you not paying off your principal - the amount of your original purchases - but your balance is actually growing, even if you stop adding to it.
By raising your minimum rate by just a couple percentage points, you can shave thousands of dollars off your bills in the form of interest. The more you pay and the faster you pay it, the less interest you'll owe in the long run.
One of the biggest factors in foreclosures today isn't the amount of a mortgage - it's the amount of non-mortgage debts, usually on credit cards. It's common for American families to have tens of thousands of dollars in credit card debt - and that can take a major toll on finances, not to mention your stress level.
But it doesn't have to be that way. Think of changing credit card terms as a wake-up call. Your bank is doing you a favor. Pay more than the minimum payment. If you can, pay off your entire balance to reduce interest - and stop your creditors from making a profit off your family. If your debt is too overwhelming to handle alone, don't give up - get help! Bankruptcy plans offer the ability to eliminate debt, either through an affordable repayment plan or, in many cases, by complete discharge. At DebtStoppers, we can identify the plan that best suits your needs at no cost. Just fill out our free personal debt analysis online for a chance to chat with a professional Atlanta bankruptcy attorney.
Banks might be raising your rates, but it's you who will have the last laugh when you eliminate debt. Lemonade from lemons never tasted so sweet.