This year it's official, the minimum payment guidelines for credit card providers have changed. Recently, major credit card companies have implemented an increase in the minimum payment requirements to make sure card holders hold up their end of the bargain, that means paying down a portion of the principal balance each month.
This new law affects most individuals and business owners alike as credit is often times one of the top sources of funding for various projects, supplies, bills, etc. However, in this credit-driven society, a lot of credit card companies have found that, despite interest rates, fees and penalties, many card holders are reneging on their payment agreements in some form or another whether it be accidentally or intentionally.
There has been little response from credit users as the new law for most credit card distributors didn't take affect until year's end. In fact, many consumers probably won't notice the increase on their billing statements for one to three payment cycles. But some financial advisors believe that when reality sinks in trouble will arise.
Investment advisor/financial consultant Robert Clark says, "I believe the impact will be disastrous. People are far too much in credit card debt, just getting by with minimum payments. When that amount doubles, it's going to put some people farther behind."
Clark goes on to say that his primary advice for consumers in general is to reduce debt, period. "I believe in Behavioral Finance," he says. "It's not where people put their money, but how they deal with it. Why did they invest, spend or finance where they did and what they intend to do with it is what I look at."
The actual recommendation to increase the minimum payment was made in March 2003 with an implementation date of late 2005. Behind the request was the Board of Governors of the Federal Reserve System, the Office of the Comptroller of Currency, the Federal Deposit Insurance Corp. (FDIC) and Office of Thrift Supervision.
This new law affects most individuals and business owners alike as credit is often times one of the top sources of funding for various projects, supplies, bills, etc. However, in this credit-driven society, a lot of credit card companies have found that, despite interest rates, fees and penalties, many card holders are reneging on their payment agreements in some form or another whether it be accidentally or intentionally.
There has been little response from credit users as the new law for most credit card distributors didn't take affect until year's end. In fact, many consumers probably won't notice the increase on their billing statements for one to three payment cycles. But some financial advisors believe that when reality sinks in trouble will arise.
Investment advisor/financial consultant Robert Clark says, "I believe the impact will be disastrous. People are far too much in credit card debt, just getting by with minimum payments. When that amount doubles, it's going to put some people farther behind."
Clark goes on to say that his primary advice for consumers in general is to reduce debt, period. "I believe in Behavioral Finance," he says. "It's not where people put their money, but how they deal with it. Why did they invest, spend or finance where they did and what they intend to do with it is what I look at."
The actual recommendation to increase the minimum payment was made in March 2003 with an implementation date of late 2005. Behind the request was the Board of Governors of the Federal Reserve System, the Office of the Comptroller of Currency, the Federal Deposit Insurance Corp. (FDIC) and Office of Thrift Supervision.