Death of Debt Vs. Death By Debt Is CU's Goal
Seeking to help its members find a way to carry credit card debt while not becoming overwhelmed by that same debt, one credit union has opted to offer its credit card holders a choice of payment plans.
"Minimum credit cards payments are commonly designed to spread debt over years, sometimes even decades. For the credit card company, this works out well-it makes the most profit," stated Local Government FCU. "From a consumer standpoint, increasing the payment and getting the debt cleared is the goal. For the millions of Americans that are thousands of dollars in debt, this goal should be more popular than ever."
While credit unions were not required to increase their minimum payments as other credit card issuers were, LGFCU decided to offer its members an option to help clear debt quicker.
Members holding one of the credit union's Visa credit cards can now choose a monthly minimum payment that not only suits their budget, but also puts them in the position to pay the credit card debt faster.
LGFCU credit card holders can choose a minimum payment from a range of 3% to 6%. The minimum monthly payment as mandated by the federal government called for upping minimums to around 4%.
By choosing a higher minimum payment, members can save about 46% in interest paid, and the duration of the debt is cut by about 46% as well, LGFCU noted.