It may feel like you're saving money by sending the required amount due on your credit card, the reality is, you're really paying much more. This time of the year more than others, the temptation to only pay the required amount and convincing yourself you'll have more money to spend on presents and yuletide greetings is a problem for many. No matter the balance of debt you currently have, this info 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?
Over time I've been probed many times if it is better to have a debt consolidation loan or many credit cards, some with zero interest. The first step you need to evaluate is how fast 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 required monthly charge on a credit card.
As more and more credit card companies are being nice and allowing even lower required payments you may say this is a good thing. And you may be right if you are really down, but watch out, it is costing you a fortune over time, which of course is why they do it. Yes, I know it is a surprise, you assumed they were just being friendly! Unlike a debt consolidation loan that has set monthly charges (Assuming rates don't change), you can vary the monthly payment on a credit card. For example, if you have a credit card debt of 3,000 with an interest rate of' percent (Annual Percentage Rate) and the minimum charge allowed is 3%. In this case the minimum monthly payment is 90. By making this payment and not using the card for anything else, it will take 12 years and 5 months to pay off this card, and you will have paid a total of 2,714.16 in interest!
So, the next month you get a letter with your statement showing that you are such a good customer they are going to lower the required charge to 2%. Great, you think, I've only got to pay 60 month and I can use another 30 down the pub. But lets look at what you are really paying. By making the new required charge only, it will now take you 28 years and 5 months to pay off your debt and you will be spending 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 friendly after all, maybe a debt consolidation loan with it's higher monthly charges isn't such a bad thought.
Yeah, I can hear you wondering, but what about the credit card with no interest, well, that is different article, but basically a lot people forget to update at the end of the period and end up with high interest.
With this in mind I would advise you to pay more than the minimum payment and pay of the credit card debt as soon as possible. If you're not able to pay even the minimum, a debt consolidation loan with a lower interest rate and a shorter period or debt settlement may be options to consider. - 31380
Over time I've been probed many times if it is better to have a debt consolidation loan or many credit cards, some with zero interest. The first step you need to evaluate is how fast 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 required monthly charge on a credit card.
As more and more credit card companies are being nice and allowing even lower required payments you may say this is a good thing. And you may be right if you are really down, but watch out, it is costing you a fortune over time, which of course is why they do it. Yes, I know it is a surprise, you assumed they were just being friendly! Unlike a debt consolidation loan that has set monthly charges (Assuming rates don't change), you can vary the monthly payment on a credit card. For example, if you have a credit card debt of 3,000 with an interest rate of' percent (Annual Percentage Rate) and the minimum charge allowed is 3%. In this case the minimum monthly payment is 90. By making this payment and not using the card for anything else, it will take 12 years and 5 months to pay off this card, and you will have paid a total of 2,714.16 in interest!
So, the next month you get a letter with your statement showing that you are such a good customer they are going to lower the required charge to 2%. Great, you think, I've only got to pay 60 month and I can use another 30 down the pub. But lets look at what you are really paying. By making the new required charge only, it will now take you 28 years and 5 months to pay off your debt and you will be spending 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 friendly after all, maybe a debt consolidation loan with it's higher monthly charges isn't such a bad thought.
Yeah, I can hear you wondering, but what about the credit card with no interest, well, that is different article, but basically a lot people forget to update at the end of the period and end up with high interest.
With this in mind I would advise you to pay more than the minimum payment and pay of the credit card debt as soon as possible. If you're not able to pay even the minimum, a debt consolidation loan with a lower interest rate and a shorter period or debt settlement may be options to consider. - 31380
About the Author:
Will holiday shopping have your credit tapped out, debt options from Debt1Options is a great way to settle credit card debt today.
