Get Out of Debt

(34) Fully Grasp the Slow Death Spiral of Minimum Monthly Payments

Minimum monthly payments on credit cards is like someone with their hands around your neck and squeezing you…not enough to choke you to death, but certainly enough to make it hard to breathe.
The only thing banks like more than you making a minimum monthly payment is for you to be late on a couple of payments so they can jack up your interest rate to 18 percent. With an 18 percent interest rate and a minimum monthly payment, money will keep rolling into the bank for as long as you can stand.
Sadly, if you have run up a $5000 debt on a credit card with an 18.9 percent interest rate and a 4 percent minimum monthly payment ($200), if will take you 137 months to repay this loan and you will wind up making total payments of $8,109.16 in payments. If you were to double the minimum payment to $400 a month, you could pay off this card in 63 months with a total in payments of $6202.