Financial Reform has finally made it down to our level.

One piece of reform legislation was related to your education of the use of credit. I am referring specifically to a requirement for the credit card industry to fully disclose how long it will take for you to pay your credit balance using minimum payments. It also requires some standardization for the format of our credit card bills themselves.

Most people are in the habit of looking at the payment due, making the payment and then wait for the next bill. This should no longer be the norm.

I have been teaching for years about the hidden cost of credit. Did you realize that placing a $2000 purchase on a credit card and making minimum payments could cost you another $2400 in interest? And it would take about 20 years to fully pay for the item.  Most of our purchases were worn out or discarded before they were ever paid for.

It was the hidden secret of the credit industry to keep us in the dark about the true cost of our purchases. Now this information is totally visible to us on each statement. Your new statements will tell you in easy to understand language how long it will take to pay the balance and how much the interest will be if you make only minimum payments.

Some lenders will also take the initiative to indicate how much your time and cost will reduce if you make a payment slightly more than the minimum required. It is amazing how much you will save if you are able to pay $15-25 more than minimum.

So here is your challenge.

Every time you receive your credit statement—read the bold print and it surrounding information. Look for two things in particular.

1. Determine if your credit limit has changed from the previous statement.
2. Look for the new information regarding all the dialogue above. It will open your eyes.

Use this new information that is being printed on your statements to your advantage. Not theirs.

Richard Sand has over 20 years of financial counseling experience. If you have questions about this article or have ideas for future topics, please contact him @ 575-9395.