Minimum Payment Increases for Some Cardholders in July

In July, Bank of America credit card customers will be paying a little more in minimum payment on their monthly bill. Currently, these cardholders are paying a minimum of $10 plus interest and fees. Beginning in July, they will have to pay 1% of their balance plus the interest and fees.

This will result in a more expensive payment for millions of consumers. If you have been paying just the minimum payment on your card and have a balance of $5,000, you will be paying an extra $40 per month.

According to the latest Experian-Gallup Personal Credit Index Survey, 11% of consumers said they usually paid the minimum payment on their credit card, but not much more. Since Bank of America has over 32 million active credit card accounts based on the latest Nilson Report, this new policy will affect an estimated three million consumers.

"Credit card companies love the consumers who only make the minimum payment. Issuers are making a tremendous profit on these consumers because of the incredible interest payments they make for years and years," says Bill Hardekopf, CEO of LowCards.com. "Increasing the minimum payment from $10 per month to 1% is a small step in the right direction, but consumers need to be paying a lot more per
month if they want to get out of the horrible credit hole they get sucked into by running up debt on their credit card."

For example, if you have a balance of $5,000, an interest rate of 15%, and a minimum payment percentage of 1%, you will pay approximately $112 per month ($50 for the minimum payment and $62 for interest). It will take almost 26 years to pay off your balance and you will pay $5,974.97 in interest. If you increase your payment by just $38 to $150 per month, it will take less than four years to pay off the balance and you will pay $1,508.52 in interest.

"If you are only paying the minimum, you are probably paying more in interest each month than you are toward your balance. The only way you can pay off your debt is to pay more than the minimum. To help you do this, call your credit card company and request a higher minimum," says Hardekopf. "In the next few weeks, if you get a tax refund in the mail, use that to pay down your credit card balance.

"The minimum payment is one of the most misunderstood and poorly explained principles of credit cards," says Hardekopf. "In 2005, new regulations forced credit card issuers into increasing the minimum payment percentage so that at least a small portion of the monthly payment would go toward the balance. Unfortunately, this percentage is difficult to find and is not listed in most terms and conditions. Call your issuer to find out the percentage used for your account, then use a rate calculator to figure out how long it will take to pay off your balance. Most consumers will be shocked to find how long it will take them to pay off the balance by just paying the minimum. While Congress is focused on the credit card industry, they should require credit card companies to provide this calculation on the cardholder's monthly statement."

Identity Theft Grows; Tips to Protect Yourself

Identity theft and credit card fraud continue to rapidly increase throughout the country.

TJX recently announced that 45 million credit and debit card numbers were stolen over an 18 month period. The latest Nilson Report says that fraud losses incurred by credit card issuers in 2006 reached an all-time high of $1.24 billion, up 9.3% from $1.14 billion in 2005. In a new Zogby Interactive Survey, 91% of those surveyed said they are concerned that their identity might be stolen and used to make unauthorized purchases.

According to the FTC, almost 10 million Americans are victims of identity theft each year and the average per victim is $4,800. Identity theft complaints to the FTC increased 18% from 215,177 in 2003 to 255,565 in 2005.

"Consumers can no longer assume that the odds are against identity theft or fraud happening to them," says Bill Hardekopf, CEO of LowCards.com. "It is extremely important to be aware of the dangers and take every precaution to protect yourself."

Here are tips to protect your identity:

1. Every month, monitor your credit card band bank statements. If anything is incorrect, report it immediately.

2. Get a copy of your credit report. Each year, you can receive a free report from each of the three reporting agencies ( http://www.annualcreditreport.com ). Stagger these and get one every four months, so you can get a current idea of what is going on with your accounts. According to Transunion, 65% of consumers say they have never taken advantage of receiving a free credit report; an additional 16% check their credit reports less often than once a year.

3. Limit what you carry in your wallet to just the credit cards and identification that you must have. Clean receipts out of your wallet and car several times a week.

4. Shred these things: receipts, copies of credit applications, insurance forms, physician
statements, bank checks and statements, expired charge cards, convenience checks and
credit offers you get in the mail.

5. Do not give out personal data for loyalty programs.

6. Mail anything with personal information or payment at the post office, not your mailbox.

7. Don't publicly post anything you may use as a password: your birthdate, pet's name, mother's maiden name or your school. Identity thieves can use the information you post to guess your password.

8. If you use a wireless router, enable the encryption to scramble the data you send online.

9. Contact all three credit bureaus to put a freeze on your credit report so that accounts can't be opened without your knowledge. This may cost about $10 each.

Surprisingly, the restaurants provide greatest chance of credit card theft. Visa recently announced that 40% of all credit card theft occurs at dining locations.

"This is the one time that the card is taken away from you for processing. Restaurants are starting to take precautions because it is becoming a problem for their business," says Hardekopf. "Even though credit card issuers lost over $994 million to credit card fraud last year, they write this off as the cost of doing business and will probably not put in stronger security measures as long as the cost remains manageable. The consumer must protect himself."