5 million people helped and counting  >  Call 1-888-888-CARE or Get Started Now
Article library
"All my creditors accepted the proposals & the benefits have been applied.  Some of my interest rates dropped by 20%!"Lin1CareOne Customer

Reduce Your Credit Card Debt And Save Money

Are you only paying the minimum payment each month? If you increased your payment amount every month by as little as $10, you could pay down your debt much faster.

What happens if you only pay the minimum monthly payment each month? The chart below illustrates how much longer it takes to pay off a credit card bill if you only pay the minimum amount required by the lender each month. In this example, the scenario has been simplified for illustrative purposes, no additional charges have been made to the card during the repayment period, and this example does not factor in a monthly finance charge. Accumulating finance charges makes the time even longer.



Elapsed Time



2% Minimum Payment

Principal Balance
Paying 2% monthly
0% Interest Rate

Principal Balance
Paying $30 monthly
0% Interest Rate

1 month

$20.00

$1000.00

$1,000.00

2 months

19.60

980.00

970.00

3 months

19.21

960.40

940.00

4 months

18.82

941.19

910.00

5 months

18.45

922.37

880.00

6 months

18.08

903.92

850.00

7 months

17.72

885.84

820.00

8 months

17.36

868.12

790.00

9 months

17.02

850.76

760.00

10 months

16.67

833.74

730.00

11 months

16.34

817.07

700.00

1 year

16.01

800.73

670.00

2 years

12.56

628.36

310.00

3 years

9.86

493.09

Paid in full by month #34

4 years

7.74

386.96

 

5 years

6.02

300.89

 

6 years

4.72

236.11

 

7 years

3.71

185.27

 

8 years

2.28

114.11

 

9 years

1.79

89.55

 

10 years

1.41

70.28

 

11 years

1.10

55.14

 

12 years

.87

43.27

 

13 years

.67

33.96

 

This table tells the grim story. If you pay the minimum monthly payment of 2%, it will take you 13 years to pay off this debt. At the end of 13 years, would you remember what you'd bought with that $1,000? Would you still own any of those items? However, if you pay $30 every month, you will pay the principal off in 34 months.

It's Your Choice

The credit card business provides a very useful and beneficial service to cardholders. These companies make money, lots of money, when you let your balance linger by either making payments later in the billing cycle or only paying the minimum payment amount each month. Could you pay an additional $10 each month to pay your debt back faster? Would you rather pay accumulating interest fees to the creditor or pocket the money? It's your choice. You can give the credit card company more of your hard-earned dollars or keep the money for yourself. For more tips about reducing debt, see the Better Business Bureau article Tips on How to Repay Your Debt.

This article is one in a series about credit cards. For further information, read the related articles in our Knowledge Center Library.

Take control of your finances with our debt help tools. Use our calculators and budget planner to help you manage your money.


 

If you liked this you may also like:

  • Living without Credit Cards

    If you believe the credit card commercials, you're not going to be able to have any fun in life unless you use their card. Well, if you've ever carried a balance on your credit cards, you know that paying interest is no fun at all. Tack on a late fee or over-the-limit fee and the good times are really over. Although credit cards can provide immediate gratification, they're more likely to cause long-term stress in your life. Thankfully, there are alternative strategies for living life without credit cards.

  • Consumers Taking On More Credit Card Debt

    “CardHub.com, an online credit card resource, reports consumers piled on $16.8 billion in credit card debt in the third quarter of 2011, up 154 percent from the same quarter last year.

  • Managing Your Credit Wisely

    Whether you're a first-time buyer or a seasoned homeowner looking to move up to a bigger or better house, how you have managed your consumer credit rating can have a real impact on both the amount and terms of your next mortgage.

  • Save Money on Your Credit Card Bills

    Did you know you can save money on Monthly Finance Charges if you pay your bill early?

  • The Dirty Dozen Credit Card Traps

    Does the credit card industry profit mostly from interest rates? Yes. But wait, there's more...

Begin our online process to see your personalized savings.

Start Now

Back Print

Quizzes and Polls

What's your debt IQ? Take one of our quizzes and find out how much you know about financial fitness.

Take the Quiz Now!

Stay On Track

Subscribe to our newsletter, packed with great articles, tips, and advice to help you make the most of your money.

Subscribe Now!

Crunch the Numbers

Our calculators can help you figure out your budget, credit card payments, mortgage, and more!

Learn More
 
Debt Help - CareOne Debt Relief Services
Offering CareOne Debt Relief Services: