Tuesday, February 24, 2009
Importance of Paying More than the Minimum
Some people think they are doing fine financially if they are able to pay the minimum amounts due on their credit cards. But if you look at what you end up paying in the end in interest charges, those items end up costing you alot more than the original price. For an example if you owe $1,100 on a credit card that charges you 18.5 percent interest. If you pay the minimum (let's say 1.7 percent) of your balance every month and you never charge another item, it will take you 12 years and six months to pay off your debt. And your $1,100 balance will have cost you about $1,400 in interest. But, if you had paid $10 more than the minimum each month, you would have reduced your payment period to six years and cut the total interest payments to $676.37. Ten dollars a month is only 35 cents a day, but it adds up to a savings of about $700 in interest.