Bradford Stroh, founder and co-CEO of Freedom Financial Network, LLC, is available to comment on the effects of the increase in minimum payments on credit cards that now is being considered by most credit card suppliers to comply with requirements of the Office of the Comptroller of the Currency (OCC).

“Essentially, credit is a loan from a bank to a consumer, and the OCC requires banks not to carry bad debt,” Stroh explains. The rules – issued in 2003, but with a long window for compliance just now taking effect – require minimum payments to cover interest, fees and a portion of the loan principal each month. “Borrowers will see their minimum payments increase from 2 percent of the balance to 3 percent or 4 percent, and plenty of people will see their payments double.”

Stroh can discuss the move’s implications, including:
1.   The bad news for consumers. For consumers with higher credit card debt, the new rules will be onerous: “The payments on a $20,000 balance could jump from $400 a month to $600 or $800 a month,” Stroh reports.

2.   The good news for consumers. In the long term, higher minimum payments mean consumers will pay debt off more quickly. “The old minimum payments left consumers barely covering their interest charges – if at all,” Stroh says. “In the long run, higher minimum payments will wipe out debt in a decade, versus the previous 20 to 30 years, and that’s really the purpose of the new rules.”

3.   Alternatives for consumers in debt trouble who can’t make the higher payments in light of bankruptcy reform legislation passed this spring. “For families already struggling financially, their minimum payments may double at the same time that many can no longer file for Chapter 7 bankruptcy protection,” Stroh notes. “When they seek other alternatives, they’ll find that debt resolution offers a much better option than bankruptcy, with similar (or better) outcomes and no bankruptcy judgment on their records.”

Before founding Freedom Financial Network, Stroh spent several years in the finance and investment industries. He held the position of vice president for CIVC Partners in Chicago, and was an associate with Doll Capital Management in Palo Alto and TA Associates in Boston. He worked as a business development specialist for Trigo Technologies, Inc. (Palo Alto), and as a consultant with Coopers & Lybrand Consulting (Chicago). He holds an MBA degree from Stanford University and a Bachelor of Arts degree from Amherst College.

Freedom Financial Network, LLC (www.freedomfinancialnetwork.com) provides consumer debt resolution services through its Freedom Debt Relief, Freedom Foreclosure Relief and Freedom Tax Relief divisions. Working for the consumer and negotiating with creditors to lower principal balances due, the company offers an alternative to bankruptcy, credit counseling, and debt consolidation. Based in San Mateo, Calif., Freedom Financial Network serves more than 3,000 clients nationwide and manages more than $100 million in consumer debt.

Source: PR Web