A few readers have reported receiving letters from Capital One announcing that they credit card company is going to change how it calculates the minimum payment due amount. It used to be 3% of the balance, now it’s going to be 1% of the balance, plus new interest, plus new late fees, or $15, whichever is greater. The change will be effective December, 2008. Most likely, Cap One saw more people not sending in their monthly payments so they changed it so that more people could afford to at least make their minimums. Maybe it’s also a way to encourage people to be more loose with the plastic for Christmas. However, having a lower minimum monthly payment also encourages debtors to take longer paying off their debt, increasing their total cost in the long run. What’s interesting though is the letter says the change is required by “federal banking regulators.” Not sure what rule change they’re referring to there. Scan of the letter inside.
(Thanks to Nathan and Jason!) (Photo: thivierr)