What the Banks Don't Want You to Know: Banks Keeping You in the Dark About the Real Cost of Debt

What the Banks Don't Want You to Know: Banks Keeping You in the Dark About the Real Cost of Debt

On December 23, 2002, five large national banks and trade associations for banks and credit unions persuaded a federal judge to throw out a law passed by the California state legislature to give consumers more information about the high cost of credit card debt.

The California Legislature wanted credit card bills to tell you that if you make only the minimum payment on your credit card it will take decades to repay and end up costing you far more in interest than the amount of the balance.

Here is what the Legislature wanted consumers to know. Based on an interest rate of 17% and a minimum payment of 2 percent of the balance:

Minimum Payment Warning: Making only the minimum payment will increase
the interest you pay and the time it takes to repay your balance.

Balance	Total Cost	Total Time to Repay
$1,000	$2,590.35	17 years & 3 months
$2,500	$7,733.49	30 years & 3 months
$5,000	$16,305.34	40 years & 2 months

These numbers will change if your interest rate is different, or if you make more than the minimum payment. If you make new credit card purchases or incur fees such as late fees, over-limit fees, or cash advance fees, it could take even longer and cost even more to repay a credit card balance.

For more information contact:

Shelley Curran
(415) 431-6747
Consumers Union West Coast Regional Office

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

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