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Bank of America recently announced its plan to increase the minimum monthly payment requirement for its customers’ credit card accounts. Under the new, consumer-friendly policy, customers must pay the amount of all finance charges, plus at least $10 each month.

The old minimum payment policy allowed interest charges to exceed the minimum payment. Given a high enough interest rate, a customer’s balance could actually increase each month, even though he paid the minimum amount due and made no additional charges. In such a situation, the entire monthly payment pays only a fraction of the interest charges and none of the principal. It is impossible to pay off the balance with only minimum payments under those circumstances.

In order to pay off a credit card balance, the monthly payment must exceed the monthly finance charges, plain and simple. The more you pay beyond the minimum, the sooner you will get out of debt and the less interest you will pay. However, not everyone is wise in the ways of credit. Many only pay the minimum amount each month. This new minimum payment policy ensures that all Bank of America customers can eventually get out of debt, even if they only make the minimum payment.

All Bank of America customers will benefit from this rule change. The majority of customers will endure the higher monthly payments, and will be rewarded by getting out of debt much sooner. However, customers that are barely scraping by with the minimum payment may now face problems. The increased minimum payment amount may be too much for them to handle. While this may seem unfortunate, the truth is that anyone who struggles to make the minimum payment under the old calculation is in trouble anyways. It is much better for them to face their debts now, as opposed to several years from now when their situation could be much worse.

Bank of America has sacrificed a chunk of its long-term profits for the good of its customers. Not only will its revenue from finance charges decrease, but it will also absorb losses from a number of customers who cannot afford to pay the increased minimum. Don’t count on all credit card issuing banks to show the same benevolence.

If you’re the type of person that only pays the minimum, there’s still hope for you yet. Find some extra money you can chip into your monthly payment beyond the minimum. Even if it’s only $10 extra a month, that’s okay. Every little bit helps. Let’s say your current minimum payment is $100 and you can chip in an extra $20 each month. From now until your balance is paid off, pay $120 each month. Here’s a real life example:

Ned has a credit card balance of $5,000 at 12% interest. His current minimum payment is $100 per month. If Ned makes a $100 each month, it will take him almost six years (69 months) to pay off his balance and cost about $1,800 in interest. However, Ned decides to forego eating out once a month and add $20 to his monthly credit card payment. Ned crunches the numbers and discovers that the extra $20 a month enables him to pay off his debt 15 months sooner and saves him almost $400 in interest.