August 29, 2006 10:20 AM
Pay The Minimum On Credit Card Bills Will Cost You (A Lot)
The math is stunning … it may take 12.5 years to payoff a credit card at 18% interest rate if you pay barely the minimum.
From Kiplinger’s Personal Finance:
It takes a very, very long time to pay off your credit card debt if you only pay the minimum. Most card issuers set your minimum payment at 4% of your debt — so a $5,000 credit card balance with an 18% interest rate would have a $200 monthly payment. But if you only make that minimum payment, it will take 12.5 years to pay off your credit card debt, during which time you’ll pay the card company a total of $2,916 in interest — more than half the cost of the whole loan in interest payments. And that’s assuming you don’t make any new charges on the card! Credit card interest is wasted money that you could have used instead to help reach your financial goals.
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