Even if you missed the news, you've undoubtedly noticed by now that the minimum payments on your credit cards have roughly doubled. The increase is due to new government regulations that require minimum payments to cover not only interest and fees, but a portion of the balance as well.
In the long run, that's probably good news for consumers. If your monthly payments only cover interest and fees, that means your balance never declines, or declines so slowly that it can take years to pay off a relatively small account. All the while, you're faithfully making payments that aren't moving you forward at all.
That doesn't make the increased payments any easier to pay.
Many consumers fall into the trap of thinking that if they can't make a full payment, there's no point in taking action until they can. Of course, after the due date passes, late charges are added, and those may in turn lead to over-the-limit charges. The minimum payment can quickly skyrocket to hundreds of dollars.
If you're rebuilding after you filed bankruptcy, it's especially important that you don't let that happen.
The good news is that working something out may be easier than you think. Experian, one of the three major credit reporting agencies, has suggested that credit card companies are well aware of the hardships the abrupt change may cause debtors, and may be more flexible than usual in working out reasonable payments.
Skipping a payment or, worse, defaulting on the account altogether, will harm your credit-especially if it's still recovering from bankruptcy or other past delinquencies. And, of course, credit card companies don't want you to go into default, either.
So, if you anticipate difficulty in meeting your new, higher minimum payment, make a phone call right away. Don't wait until your payment is late, when new charges will apply and creditors may be less likely to work with you.
Late and missed payments can negatively impact anyone's credit scores, but if you're rebuilding credit after bankruptcy it's all the more important that you don't let that happen. Don't lose the benefits of the fresh start bankruptcy provides-pick up the phone now and take control.
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