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Minimum Payment Hell 

Consumer advocates push for credit card changes

If you've ever maxed out a credit card, you know the pitfalls of paying the minimum monthly charge only: it barely covers the interest, let alone chips away at the original debt. That's one reason why consumer advocates are trying to get credit card companies to provide customized disclosures telling each credit card user exactly how long it will take to pay off his or her current bill with the monthly minimum, and how much it will cost in interest.

For instance, if you paid 2.5 percent (a typical minimum) on a $5,000 credit card bill at a 13-percent interest rate, it would take 230 months (or about 19 years) to pay off the debt, even if you made no new charges. And you'd end up paying an extra $3,644.62 in interest, according to calculations.

Pushed by federal regulators, credit card companies already have been raising minimum monthly payment requirements to encourage debtors to climb out of their financial holes.

"The goal is commendable," said Bruce Hamlett, director of United Family Services' economic independence program. "Unfortunately, the clients we see are living on the edge, so any increase in minimum payments is going to push them over the edge."

The push for customized payment disclosures has new ammunition. A recent survey by the Government Accountability Office found that nearly 60 percent of credit card users who are currently carrying balances want to see customized disclosures. An even higher number, 68 percent, said the customized disclosure information would be "very" or "extremely" useful to them.

Not that credit card companies want to change anything about the way they do business. The industry told the Government Accountability Office that it would cost between $9 million and $57 million to include customized disclosures. Also, the industry said, such disclosures could leave credit card companies open to lawsuits.

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