Credit Card Payment
According to the Nilson Report, the total credit card debt of Americans at the end of 2008 was $972.73 billion.
The amount increased by 1.12% from the previous year. This figure corresponds to $8,329 of average credit card debt
per household. Of the billions of Americans with credit card debt, only 74% pay their bills on time. The average
credit card payment made by one out of six families is the minimum monthly payment. According to MSN’s Melody
Warnick, 40% of cardholders carry a balance from month to month.
How much exactly is the minimum monthly payment? So far, major card issuers like Citibank, Bank of America, and
MBNA issued an average credit card payment of 4% of the amount of the balance. This is actually a jump from the
previous 2% or 2.5% following the nudge from the government and regulators who observed that this low minimum
average credit card payment was encouraging Americans to keep on spending. Debt settlement
organizations say that the spending habits of Americans were keeping them in a debt cycle that they’ll never be
able to escape. As a result, credit card companies were pressured to raise the minimum average credit card payment
they required every month.
Although this drastic increase is not the cure-all solution, especially when thinking about its effect on
cardholders, most experts believe that it will help in more ways than one. Paying an increased average credit card
payment every month will help the cardholder relieve himself of debt sooner and will decrease the amount of
interest he will rack.
The best solution to avoid all credit-related problems is to always keep track of your spending habits and to pay
in full and on time every month. If this isn’t possible, experts suggest paying 10% to 15% of the balance. The
average credit card payment that you spend every month should be enough to cover at least 10% of your balance. This
is the break-even average minimum credit card payment.
Habitually going over your means will start your downhill fall. Remember to borrow only what you can afford. It is
also a smart move to stay below 50% of your card’s credit limit. This way, the probability of paying the balance in
full is 100%. If you are now in the process of paying off your debt, the first thing you should do is to make goals
and a timeline of your payments. There are a lot of credit card calculators available online. Sometimes for no
charge, they can help you compute how much you have to give every month to pay-off your debt within a certain
period of time or how long you will have to pay if you only give the minimum average credit card payment.
Reality checks like this will bring you back to the perspective you need to be in.
Source: Credit Cards For People With Bad Credit Rating
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