Higher Minimum Payments Can Save Money, According to Chicago Bankruptcy Lawyers
Higher interest, a lower credit limit and a larger minimum payment - the new changes credit card companies are throwing our way aren't exactly in the holiday spirit. But at least one of these changes can actually be spun to work in your favor.
In the past, most credit card companies kept minimum payments as low as possible - around 2-3%. They figured the less you paid each month, the longer you'd have to keep paying. But with thousands of consumers defaulting on their credit cards, companies are getting anxious - they'd rather have their money now.
Of course, the downside to a higher minimum payment is that you'll see a jump in your monthly expenses. If you're paying 2% on a $10,000 debt, that's $200 a month. Double that to 4% and now you're paying $400. When you're already struggling to pay the mortgage or buy groceries, a couple hundred more bucks is hard to come by. And it means you're going to have to cut back somewhere else.
But here's where the benefit comes in.
When you pay 2% each month on a card with a 25%APR, all you're paying is interest. That means you're going to have to keep making payments - year after year - unless you stop procrastinating and actually pony up more than the minimum. But when your rate is increased, say to 4%, you'll automatically start paying down the principal, no more excuses.
The more you pay now, the less you'll have to shell out in the future since your debt will be shrinking. Unfortunately, that fact doesn't help you make it more affordable. But bankruptcy can.If you find yourself under a growing mountain of debt, bankruptcy can help free you. With the right plan, you can usually make consolidated debt payments at a rate and schedule you can handle. As an added bonus, filing for bankruptcy can legally protect you against foreclosure and creditor harassment.
You can find a bankruptcy plan that's right for you when you sign up for a free one-on-one debt analysis with a Chicago bankruptcy lawyer. Your creditor might be getting more of your money today, but at DebtStoppers, we can help ensure they'll be getting less tomorrow