Credit Card Minimum Payments Increasing

by Tax Guy - Burlington Accountant on May 20, 2010 Print This Post Print This Post

The Globe and Mail reported yesterday that MBNA has sent notices to all of its clients announcing changes to the way in which the minimum credit card payments will be determined. Moreover, the other credit card companies are expected to follow suit soon in order to comply with new federal regulations designed to create transparency.

According to the new rules, minimum credit card payments should increase. MBNA provides an example where a minimum payment of $185 would increase 66% to $307. The change in the minimum payment formula will ultimately reduce interest charges paid by consumers.

The new formula will take effect in August 2010.

Prepare Yourself For The Change

For those of us who pay our bills in full or make significant monthly payments above the minimum payment should not be adversely affected. Those Canadians who currently struggle making minimum monthly payments are facing tough times.

Now may be the time to look for a consolidation loan and get rid of your existing credit cards. If a consolidation loan is not available, you may have to seek a consumer proposal or at worst bankruptcy.

Tips To Reduce Credit Card Problems

While credit cards provide an excellent way to avoid bank fees by using the float, if not paid promptly, they can be expensive. Here are a few tips to avoid credit card problems:

  1. Only have one credit card,
  2. Pay your balance in full every month,
  3. Avoid credit cards with annual fees,
  4. If you have to carry a balance, seek out low interest credit cards,
  5. Avoid rewards cards or points cards. These features often come at an additional cost by way of a higher annual fee.

To find out more about how to avoid credit card problems read Tips To Reduce Credit Card Debt Problems.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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