Reply #111: crunching the numbers [View All]

[pretzel2]

It ...doesn't do MUCH to help folk.

Working through my revised lesson, we have a fake college kid with Chase's Student Card at 16.74% interest. In three months he gets in the hole about $1400--paying minimums. Reworked things with new law, same spending pattern--and he's about $80 behind (the indebtedness in 2005 laws) when he decides to cut up the card four months in. So with the new minimums--the amount owed doesn't skyrocket like it would have--but he is spending months hovering at $1200-1300, paying minimums around $200 with a decrease in his balance of about $15. SO he IS making progress at paying it down--but what a return!!!--send in $200, realize $15. The win here for the consumer is that one doesn't see the explosive exponential growth of the debt--and if one could acquire the funds--one COULD pay this down--but by far the winner is the credit card company--realizing heaps more of their interest and fees.

Still, the shock of the greater minimums might deter otherwise sloppy thinking--can't get lulled into economic sleep.