Did you know that making your minimum credit card payment every month will take you as much as four times longer to get rid of debt than making a fixed payment? I recently ran across a nifty calculator at Bankrate.com that I recommend looking at. When I plugged in $5,000 debt at 12% interest with a minimum payment of $100 I was shocked to learn that this $5,000 was going to take 259 months to pay off! The same numbers on my financial calculator showed only 70 months for a pay off. “OK”, I muttered, “What goes?”
Make sure you read the fine print about minimum payments
photo credit: TheTruthAbout…
Question: Obviously, something was haywire, but what was it?
Answer: I didn’t understand how minimum payments are figured.
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