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Survey Finds Largest Credit Card Issuers Not Doubling Minimum Payments

by Peter Andrew


Finds Largest Credit Card Issuers Not Doubling Minimum Payments

Contrary to reports in many media outlets, an IndexCreditCards.com

survey of the seven largest credit card issuers found that none

is doubling credit card minimum payments. In fact, most are

adhering strictly to new federal guidelines or believe that

their current minimum payment formulas are adequate to satisfy

the government's desire to see credit card balances paid in

a reasonable amount of time.

Guidance from the government's Office of the Comptroller of

the Currency suggested that card issuers should require their

customers to pay monthly at least one percent of their principal

credit card balances, plus all finance charges and any fees.

The goal was to get balances paid down--under the previous industry

standard two percent minimum payment, customers with high balances

could conceivably "meet the minimum" without even paying off

a full month's interest, much less taking a chunk out of the

principal balance.

While the government's guidance led to fears that credit card

minimums might double, information from the seven largest card

issuers (who own an estimated 60% to 70% share of the credit

card market) suggests otherwise:

    • Four

    of the top issuers are strictly adhering to the new guidelines

    of one percent of the principal balance, plus interest and


    • Two

    issuers are making no changes, due to long-standing minimum

    payment policies that the companies feel already address the

    government's concerns.

    • One

    issuer has thus far made no change to their minimum payment

    policy of 2% of the credit card balance.


    mid-December we reported that claims of minimum payments doubling

    were not accurate; now we have the proof," said Adam Jusko,

    Research Director for IndexCreditCards.com. "Most credit card

    issuers are adhering to exactly what the government suggested

    or are sticking with minimum payments already above those guidelines.

    While some customers will see increased credit card minimums,

    the impact will be slight--certainly not a doubling."

    By way of example, a person with a $10,000 credit card debt

    and a 19% annual interest rate would have a required monthly

    payment of approximately $203.16 using the old 2% minimum payment

    standard. Under the new requirements that most issuers are using,

    the monthly payment would be $258.33 ($158.33 in interest, plus

    $100 of the outstanding balance). This is a difference of roughly

    $55 - on a balance and interest rate that exceeds what the average

    consumer is carrying.


    are the specific minimum payment standards from the seven largest

    credit card issuers, in alphabetical order, as reported to IndexCreditCards.com

    by representatives from the companies:

      • American

      Express - No change in minimum payment formula. To calculate

      minimum payments, American Express first takes the highest

      of the following figures: 2% of the outstanding balance, or

      all current finance charges, or $15. (If current finance charges

      is the highest of these three figures, the company uses finance

      charges plus $15 as the first part of the minimum payment

      equation. This usually ensures that part of the principal

      is paid.) The company then adds any past due amounts and any

      over-the-limit fees to come up with that month's minimum payment.

      • Capital

      One - No minimum payment changes. Company uses 3% of the overall

      balance, or $15, whichever is greater, as the monthly minimum


      • Chase

      - Minimum payment equals the higher of these figures: either

      2% of the outstanding balance, or 1% of principal plus finance

      charges plus fees.

      • Citibank

      - Minimum payments equal 1% of the principal balance, plus

      all current finance charges, plus fees such as late payment

      or over-the-limit fees.

      • Discover

      - No minimum payment changes at present. Minimum payment equals

      2% of the outstanding balance. A company spokesperson declined

      to say whether Discover will make changes to this standard

      in the future.

      Published 01/04/06 (Modified 12/28/15)

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