Millions of credit card borrowers are about to face larger monthly payments, a change that represents both good news and bad for consumers.
Under new guidelines suggested by the federal government, starting in January minimum monthly payments for credit card debt will generally increase. Many mortgage lenders will no longer require payments equal to 2 percent of the debt, an amount that includes interest and fees. Instead most will now require a payment equal to 1 percent of the debt plus fees, interest and charges. Altogether, the new payment will be more than 2 percent of the borrower”s outstanding debt in many cases.
This is the good news. The higher monthly payments will reduce overall interest costs and force people to borrow less with credit cards.
The bad news? It will reduce the ability of many consumers to obtain a mortgage.
According to the most recent Federal Reserve report, we now have $799.1 billion dollars in outstanding credit card debt. That”s about $2,681.54 per person: For a household with four people, average credit card debt amounts to almost $10,750.
Such debt would not be a problem if it were offset by...