I recently wrote an article explaining that credit card minimum payments were doubling. I opined that it was actually a good development, because it would force some people to pay off their debt faster. I then received some clarifications from a few helpful people. Permit me to set the record straight.

For starters, Justin McHenry of www.indexcreditcards.com explained: "Credit card minimum payments haven't doubled from 2% to 4%. While 2% was the previous standard payment, the new standard is 1% of the outstanding balance, plus all current finance charges and any other fees. Each credit card company has chosen to handle this a bit differently, but none has doubled the minimum payment."

Curtis Arnold, of www.cardratings.com, pointed me to an article by Mike Killian that noted, "the OCC's [Office of the Comptroller of the Currency] guidelines state that minimum payments must not only include all new finance or interest charges and any penalty fees, but must also reduce your principal by 1% each month. The intent here is to prevent consumers for paying on a credit card for 20-30 years."

The upshot is that there is a relatively new mandate for credit card issuers, and it's designed to help borrowers pay off debt more quickly. For some issuers, this means increasing (but not necessarily doubling) minimum payments. For others, it means no change at all, if the company's current policy meets the requirements. The folks at indexcreditcards.com actually did some digging and detailed "the specific minimum payment standards from the seven largest credit card issuers." Here they are:

  • American Express (NYSE:AXP) reported no change in its minimum payment formula. It starts with 2% of the outstanding balance, or all current finance charges or $15 (whichever is greater), and then adds any past-due amounts and other fees.
  • Bank of America (NYSE:BAC) said that it is charging as a minimum payment "1% of the principal balance, plus all current finance charges, plus fees such as late payment or over-the-limit fees."
  • Capital One (NYSE:COF) reported no minimum payment changes. The company charges 3% of the overall balance or $15, whichever is greater.
  • JP Morgan Chase's (NYSE:JPM) minimum payment is either 2% of the outstanding balance or 1% of principal, plus finance charges, plus fees -- whichever is higher.
  • Citibank (NYSE:C) charges 1% of the principal balance, plus all current finance charges, plus fees.
  • Morgan Stanley's (NYSE:MS) Discover has not made any minimum-payment changes. It charges 2% of the outstanding balance.
  • MBNA (recently bought by Bank of America) charges, as a minimum, 1% of the principal balance, plus current finance charges, plus fees.

So the bottom line is that there have been fewer changes for the better than I originally thought. In many cases, borrowers won't be paying off anywhere near 4% of their debt each month. Still, the situation seems better than it was in the pre-change days, when some minimum-payment formulas permitted people to not reduce their outstanding principal at all.

And if any card issuers hike the minimums even more, this Fool would be clapping at such a move.

You can learn more in our Credit Center, which features some surprisingly interesting info about the credit card industry. We now offer spiffy Motley Fool credit cards that are worth looking into as well. Being smart about credit can potentially save you tens of thousands of dollars. Check out the following articles:

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Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.