Minimum Payments and High Interest Equal Financial Death!
The great stranglehold credit card debt gets on people is due to two things: minimum payments and high interest. These two things alone can cost consumers tens of thousands of dollars. This is where the credit card companies make the majority of their money. Getting people sucked into the system of “just paying the minimum†will have a devastating affect on ones finances.
For example a debt balance of $10,000 with an 18% interest rate will take 382 months (32 years) to pay off and over $14,000 will have gone to interest alone, if you pay just the minimum. Take the same debt amount but instead bump the interest rate up to 28%, which is where millions of people get stuck and the numbers look a lot worse. Take the same 10k of debt with the 28% rate and now it will take 2047 months (171 years) to pay off through minimum payments, not to mention that over $135,000 will be spent on interest, over 13 times the original balance.
For some it takes a long time for it to sink in. Meaning the rough financial predicament they have themselves in. You may have been a great customer for 10 years to your creditors and all it will take is one minor slip up and you can see the interest rates on all of your cards skyrocket, sucking enough money from you to buy a new car for some a new house. There are many options for credit card debt relief, and not one method will work for everyone. But the one thing for sure is that doing nothing and paying the minimums is by far the worst thing that can be done.
