Credit card companies are rushing to grab any fee they can before the new Credit Card Reform Act kicks in next year.
It’s all about higher fees, and one tried-and-true way of generating bigger fees is to hike the minimum monthly payments on (usually) unsuspecting credit card customers. In fact, seeing minimum monthly card payments double is increasingly common.
JP Morgan Chase (Stock Quote: JPM) just raised its minimum payments by up to 5%. That will force Chase customers to dig deeper to keep their credit card balances in good order. Failure to adhere to the higher payments is a financial no-no: it could hurt your credit score and could cause your card company to pull the plug on your plastic, so to speak.
Banks aren’t above pulling a fast one, either. The monthly payment hikes are mostly targeted at consumers with lower card interest rates. If they balk, the card carrier jumps in with an offer to halt the minimum payment hikes – if the card customer accepts a higher interest rate.
The good news? Consumers don’t have to take minimum payment hikes lying down. Here’s an action plan to thwart card companies before they can strike.
Bury the card. The hands-down best way to keep your minimum payments in check (OK, besides paying off the card) is to cease using it. Better to switch to a debit card or even to cash, and then turn your attention to paying down the debt on the card so the minimum payment becomes much more manageable.
Threaten to take your business elsewhere. This one really depends on the credit card carrier, and the policies carried out by customer service managers. But you can always threaten to transfer your card to another carrier if you don’t get your payment hike revoked. Make a phone call to your carrier, ask to talk to a decision-maker, and tell them you’ll leave if they don’t call off the dogs. Make sure to mention your good payment history and your steady employment situation (if that’s the case). If you’re aggressive enough, this tip will pay off more than you might think. Note: You might actually have to transfer your current card to a lower-rate piece of plastic if the minimum payment amounts are too high too pay.
Close the card out. Yes, closing a credit card account can lead to a lower credit score – for the short-term. But you’ll survive that – and better yet, have more cash in your pocket to pay off other debts, and restore your good credit. Plus, there’s a unique sense of satisfaction in saying “You’re fired!” to a credit card company.
Getting a letter from your card company that says your minimum monthly payment is being jacked up is the last thing you need. So buck up your spirits by fighting back – and take your turn in jacking your card carrier up against the all.
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