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by Tim Isbell, May 2017
Making minimum payments on your credit card is a terrible strategy.Let's assume you have a $5,000 credit balance with an 18% annual rate. Every month, your credit card company requires you to pay at least 4% of the current balance, or $20, whichever is greater.
If you don't charge another dollar to the card, but just faithfully pay the minimum, it will take you just over ten years to pay it off. During that time, you paid the original $5,000 plus $2,831 more in interest and charges.
Use this creditcards.com online calculator to insert your actual numbers.
For most people, carrying a balance from month to month on their credit card is the highest interest debt they have! So it makes financial sense to pay it off as fast as you can!
The only good credit card strategy is to pay off the entire balance every time the bill comes.
Regards,
Tim
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