Why Settling Only The Minimum Monthly Payments Will Cost You
I remember when I got my first credit card and made my first big purchase with it. It seemed like such a convenience. Instead of saving up for it over the next six months, I was able to get the item right then and there, with an unlimited amount of time to pay it off. How can I complain?
A couple of years later and several other similar purchases, I’m still paying for that convenience. Yep, I’ve been paying off the same debt for years.
Since I don’t make a lot of money in the first place, I only pay minimum monthly payments (give or take a little extra) on my credit cards. As a result, the total amount I’ve paid the card company so far, along with my revolving balance is worth a good percentage higher than what the items actually cost. By the time I’m able to pay the whole debt off, I figure I’ll have spent double the actual price of the purchases - not exactly the best monetary investment a guy can make.
If all you pay off in your credit card debt is the monthly minimum, you’ll often end up with relatively the same amount of debt month to month. The interest, along with other charges, pretty much nullify your regular payments. In some cases, I’ve seen consumers incur even more debt without swiping the credit card even once during the billing period!
Want to really shave off your credit card debt? Try paying double or triple the minimum amount. While you’ll probably have to tighten your belt in the process, it’s a short-term suffering that should lead to long-term gain.
