The True Cost of Credit Card Minimum Payments

The True Cost of Credit Card Minimum Payments Making only the minimum monthly payments on your credit cards is like running on a financial treadmill. By Only Paying the minimum amount, A. $5000 Balance DIT CARD X 18.9% Interest Rate = 11 years and 5 months to pay off if the cardholder only pays a minimum payment of $200 each month. The total cost once it is finally paid off ends up being $8,109. YOU END UP PAYING 62% MORE. Let's look at how much you'll really pay for what you want when you make minimum credit card payments on these popular items! The results may surprise you... (at an 18% interest rate, making a minimum payment of either 2% or $15.) Price: $399.99 Price: $425.00 Canon ipad 2 eos rebel t3i minimum payment: $15 minimum payment: $15 It will take you 35 months to be rid of your debt. In that time, you will pay $114.66 in interest. It will take you 38 months to be rid of your debt. In that time, you will pay $132.57 in interest. Price: $1,499.00 Price: $2,295.00 13" MacBook Pro. All-Weather Outdoor 32 In. 720p LCD HDTV - Black by Apple minimum payment: $37.48 by Sunbrite minimum payment: $45.90 It will take you 153 months (12.75 years!) to be rid of your debt. In that time, you will pay $1,671.69 in interest. It will take you 317 months (over 26 years!) to be rid of your debt. In that time, you will pay $5,281.86 in interest. The Credit Card Act of 2009 Credit card companies are now required by law to show you on your bill how long it will take you to pay off your balance making minimum payments how much interest you'll end up paying. PROTIP If you have more than one credit card, make minimum payments on all cards except for the card with the HIGHEST interest rate and pay that one off as fast as you can to maximise your savings. IF CREDIT CARDS WORKED LIKE MORTGAGES If you paid a set amount regardless of your balance, like if you were to pay $200 per month until the balance was paid, it would take you 32 months instead of the 137 months it would take if the payment depended on the balance and you only paid the minimum. You would pay nearly 50% less in total interest. Paying the minimum will keep your credit report in order, but that is exactly how the system is designed to generate profit for the credit card companies. They continue to profit while you continue to accrue interest. If you're in debt, one of the best ways to get out of debt is through negotiating with your creditors. You can do it yourself or you can hire a BBB accredited company like National Debt Relief to help you. YOU NEED DEBT RELIEF Get that debt relief at ... NATIONAL DEBT RELIEF www.NationalDebtRelief.com 1-888-703-4948 Sources: Image Sources: http://www.bankrate.com/calculators/managing-debt/minimu m-payment-calculator.aspx http://credit.about.com/od/usingcreditcards/tp/pay-more-than- minimum.htm http://www.investopedia.com/financial-edge/0712/why-making -minimum-payments-gets-you-nowhere.aspx http://blog.equifax.com/credit/making-minimum-payments-on- credit-cards-will-cost-you-in-the-long-run/ http://credit.about.com/od/usingcreditcards/qt/minimumonly.h "Credit Card Stock Image" By phanlop88 / freedigitalphotos.net "Amount Taking From Wallet Stock Photo" By sixninepixels / freedigitalphotos.net "Hand Holding Credit Card Stock Image" By phanlop88/ freedigitalphotos.net "Saving Money Concept Stock Photo" By Sujin Jetkasettakorn/ freedigitalphotos.net "Percent On Falling Cubes Stock Image" By renjith krishnan / freedigitalphotos.net "Young Woman With Dollars In Her Hands Stock Photo" By stockimages / freedigitalphotos.net "Payment Machine Swipe Stock Photo" By hin255 / freedigitalphotos.net "Hand Stacked Gold Coins Stock Photo" By pakorn / freedigitalphotos.net tm http://www.bills.com/minimum-payment-calculator/ http://www.federalreserve.gov/creditcardcalculator/