The Minimum Payment Trap
Let's say you have a $5,000 credit card balance at 22% APR. Not unusual, right? The minimum payment might be around $100 per month. Seems manageable. You can handle that.
But here's what they don't print in big letters: at minimum payments only, it will take you about 9 years to pay off that balance. And you'll pay roughly $6,000 in interest. That's right. You'll pay more in interest than the original balance.
That $5,000 shopping spree? It actually costs you $11,000. That's not a mistake in the math. That's how credit card companies make their money.
Why This Happens
Credit card minimum payments are usually calculated as a percentage of your balance, often 1-2%. As your balance goes down, so does your minimum payment. This keeps you paying forever.
It's a brilliant business model if you're the credit card company. Not so great if you're the one writing the checks every month and wondering why your balance barely moves.
Breaking the Cycle
The good news? Even small increases to your payment can dramatically reduce your payoff time. That same $5,000 balance at $200/month instead of $100? You're done in 2.5 years, and you save over $3,500 in interest.
- Double your minimum payment if you can
- Round up to the nearest $50 or $100
- Put any extra money toward the balance
- Never pay just the minimum if you can avoid it
Use Spendify's debt calculator to see exactly how different payment amounts affect your timeline. Sometimes seeing the numbers is the motivation you need.
Take Control Today
The credit card companies have done the math. Now it's your turn. See exactly what your debt is really costing you, and make a plan to pay it off faster. Your future self will thank you.
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