New credit card legislation is a step in the right direction…
The Credit Card Minimum Payment Warning Act of 2007 has been in the works for a few years now. If passed, the act will require credit card companies to disclose information about the impact of making only the minimum payment. This includes how long it will take to pay your credit card off and the extra amount in interest you’ll pay when you make only the minimum payment.
Here’s what the statement must also include:
- Total length of time it will take to pay off the balance in years and months
- Total costs in interest and principal at the minimum rate
- Additional fees that may apply
- Monthly payment required to pay the balance off in three years
- Toll-free number for credit counseling and debt management assistance
Introduced by Sen. Daniel Akaka of Hawaii, it has been endorsed by the Consumer Federation of America, the Consumers Union, the National Association of Consumer Advocates and the National Consumer Law Center, among others. “Our bill makes clear the adverse consequences of uninformed choices, such as making only minimum payments,” Akaka said, “and provides opportunities to locate assistance to better manage credit card debt.”