Since it may seem like you're saving funds by sending the minimum amount due on your credit card, the reality is, you're really paying much more. This time of the year more than others, the feeling to only pay the required balance and convincing yourself you'll have more money to spend on gifts and yuletide greetings is a problem for many. No matter the balance of debt you currently have, this article will show you the need of paying more than the required - something that could save thousands of dollars over time. How's that for a stocking stuffer?
From time to time I have been questioned lots of times if it is better to have a debt consolidation loan or many credit cards, some with zero APR. The first step you need to decide is how quickly you want to pay the debt off. The best piece of knowledge is that you pay it off as fast as possible. Let's have a look at the effects of making the minimum monthly charge on a credit card.
Currently more and more credit card companies are being friendly and allowing even lower minimum charges you may think this is a good thing. And you may be right if you are really broke, but watch out, it is costing you a fortune in the long run, which of course is why they do it. Yes, I know it is a surprise, you thought they were just being friendly! Unlike a debt consolidation loan that has set monthly charges (Assuming rates don't update), you can vary the monthly payment on a credit card. For example, if you have a credit card balance of 3,000 with an APR rate of' percent (Annual Percentage Rate) and the required payment allowed is 3%. In this case the minimum monthly charge is 90. By making this charge and not using the card for anything else, it will take 12 years and 5 months to pay off this debt, and you will have paid a total of 2,714.16 in interest!
The following month you receive a letter with your statement showing that you are such a good customer they are going to lower the minimum charge to 2%. Nice, you think, I've only got to pay 60 month and I can spend another 30 down the pub. But lets look at what you are really paying. By making the new minimum payment only, it will now take you 28 years and 5 months to pay off your card and you will be paying a whopping total of 7,845.73 in interest. This is an additional 16 years and 5,131.57 in extra interest, rather an expensive trip to the pub I would say. So, maybe the credit card company isn't being so nice after all, maybe a debt consolidation loan with it's higher monthly payments isn't such a terrible thought.
Yeah, I can hear you wondering, but what about the credit card with no interest, well, that is another topic, but basically some people forget to change at the end of the period and end up with high interest.
So I would advise you to pay more than the minimum payment and pay of the credit card debt as soon as you can. If you're unable to pay even the minimum, a debt consolidation loan with a lower interest rate and a shorter term or debt settlement may be choices to evaluate. - 29866
From time to time I have been questioned lots of times if it is better to have a debt consolidation loan or many credit cards, some with zero APR. The first step you need to decide is how quickly you want to pay the debt off. The best piece of knowledge is that you pay it off as fast as possible. Let's have a look at the effects of making the minimum monthly charge on a credit card.
Currently more and more credit card companies are being friendly and allowing even lower minimum charges you may think this is a good thing. And you may be right if you are really broke, but watch out, it is costing you a fortune in the long run, which of course is why they do it. Yes, I know it is a surprise, you thought they were just being friendly! Unlike a debt consolidation loan that has set monthly charges (Assuming rates don't update), you can vary the monthly payment on a credit card. For example, if you have a credit card balance of 3,000 with an APR rate of' percent (Annual Percentage Rate) and the required payment allowed is 3%. In this case the minimum monthly charge is 90. By making this charge and not using the card for anything else, it will take 12 years and 5 months to pay off this debt, and you will have paid a total of 2,714.16 in interest!
The following month you receive a letter with your statement showing that you are such a good customer they are going to lower the minimum charge to 2%. Nice, you think, I've only got to pay 60 month and I can spend another 30 down the pub. But lets look at what you are really paying. By making the new minimum payment only, it will now take you 28 years and 5 months to pay off your card and you will be paying a whopping total of 7,845.73 in interest. This is an additional 16 years and 5,131.57 in extra interest, rather an expensive trip to the pub I would say. So, maybe the credit card company isn't being so nice after all, maybe a debt consolidation loan with it's higher monthly payments isn't such a terrible thought.
Yeah, I can hear you wondering, but what about the credit card with no interest, well, that is another topic, but basically some people forget to change at the end of the period and end up with high interest.
So I would advise you to pay more than the minimum payment and pay of the credit card debt as soon as you can. If you're unable to pay even the minimum, a debt consolidation loan with a lower interest rate and a shorter term or debt settlement may be choices to evaluate. - 29866
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If holiday spending has your credit cards maxed out, then get debt cures from Debt1Options to start to reduce credit card debt today.
