If you are regularly paying for the minimum of your credit card debt, did you ever notice that your balance does not seem to be going down? Even if you pay your statement on time, the difference from last month’s amount does not seem to be significant at all. When the next bill comes in, you realize that what you paid for the previous month was only a little over the finance charges and interest of your debt. Only a small amount of what you paid for actually went to the principal amount on your credit card balance.
It is a known fact that credit card debt is very easy to fall into but hard to get out of. The temptation to keep on using it until we’ve reached the maximum is very strong. Paying back what you owe, however, can be very tricky.
Most of credit card users think that paying for the minimum payment stated on the bill is enough to tide them over. Let us show you some figures to help you understand what we mean.
The minimum payment is mandated by the government to be 4% of the outstanding balance. What used to be 2% was increased because the authorities recognized the never ending payments that consumers were tricked into paying.
You see, when you have a $10,000 credit card debt on a 20% interest rate, your minimum payment will be $400 a month. If you stick with this payment, it will take you 14 years to pay off your debt! Not only that, your payments will include an interest that will amount to almost $7,000.
But if you add a mere $100 to your monthly payments to make it $500, you only have to pay for your debts for 25 months - that is only a month over 2 years! Not only that, the interest will only be $2,266. Imagine the savings by only adding $100. You can skip buying your lunch if you want to. The average American spends more than $30 a week dining out for lunch. If you make a little extra at night, you have something to pack in the morning. You can make a few savings here an there to get this extra $100 to put into your payments.
By making a few sacrifices everyday, you can shorten your credit card debt payment to 2 years instead of the 14 years. Not only that, you get to save more than $4,000 in the process. Thinking about these figures will surely motivate you to cut back on your expenses.
Of course, if you cannot afford even the minimum of your payments, you should opt for a debt relief option. There are options that will allow you to reduce your current balance so you only have to pay for a percentage of the original amount. This program is called debt settlement. Once you have completed that payment, the remaining debt will be forgiven. The trick here is getting the creditor to agree. As challenging as that may be, it is worth looking into. And it is much better than being stuck with minimum payments for sure.
Research more on your options for debt relief. Knowing your options will help you achieve financial freedom.
It is a known fact that credit card debt is very easy to fall into but hard to get out of. The temptation to keep on using it until we’ve reached the maximum is very strong. Paying back what you owe, however, can be very tricky.
Most of credit card users think that paying for the minimum payment stated on the bill is enough to tide them over. Let us show you some figures to help you understand what we mean.
The minimum payment is mandated by the government to be 4% of the outstanding balance. What used to be 2% was increased because the authorities recognized the never ending payments that consumers were tricked into paying.
You see, when you have a $10,000 credit card debt on a 20% interest rate, your minimum payment will be $400 a month. If you stick with this payment, it will take you 14 years to pay off your debt! Not only that, your payments will include an interest that will amount to almost $7,000.
But if you add a mere $100 to your monthly payments to make it $500, you only have to pay for your debts for 25 months - that is only a month over 2 years! Not only that, the interest will only be $2,266. Imagine the savings by only adding $100. You can skip buying your lunch if you want to. The average American spends more than $30 a week dining out for lunch. If you make a little extra at night, you have something to pack in the morning. You can make a few savings here an there to get this extra $100 to put into your payments.
By making a few sacrifices everyday, you can shorten your credit card debt payment to 2 years instead of the 14 years. Not only that, you get to save more than $4,000 in the process. Thinking about these figures will surely motivate you to cut back on your expenses.
Of course, if you cannot afford even the minimum of your payments, you should opt for a debt relief option. There are options that will allow you to reduce your current balance so you only have to pay for a percentage of the original amount. This program is called debt settlement. Once you have completed that payment, the remaining debt will be forgiven. The trick here is getting the creditor to agree. As challenging as that may be, it is worth looking into. And it is much better than being stuck with minimum payments for sure.
Research more on your options for debt relief. Knowing your options will help you achieve financial freedom.
RSS Feed