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If you stick to the minimum payment on your credit card debt, it will take you more than 12 years to completely pay off your debt. Take note that if you pay only the minimum, your payment will be $400 to start with and it will go down as you slowly pay off your debt. Over the course of that 12 years and 4 months, you will end up paying more than $4,400 worth of interest. This is all with the assumption that you will not use your credit card during the 12 years you are paying it off. In case you want to avoid spending that long to completely pay your debt, you can choose to consistently pay $400. That would mean you are paying only the minimum during the first month - but you will end up paying more after - since the minimum actually goes down as you continue to make payments. This strategy will help you pay your debts in 2 years and 7 months time - almost 10 years earlier compared to sticking to the minimum payment requirement. As you notice, paying more will help you get bigger savings on your credit card debt. You need to work hard to contribute as much as you can towards your credit card payments.
Tips to pay more than the minimum of your credit cardsIt will be harder to pay more than the minimum if your balance is bigger. But if you are consistent with your efforts, you will eventually pay off all your debts. Do not believe the minimum payment trapbecause it will keep you in debt far longer than necessary. Not only that, it will make you pay more on the interest. Here are some tips that will help you pay more than the minimum of your credit cards.
- Get one expense off your budget and put it towards your credit card debt payments. It may be that subscription that you are not using. Or you can choose to brown bag your lunch every other day. Any sacrifice should be worth it if it means you can get out of debt faster.
- Use any windfall to pay off your balance. This can be a holiday bonus or your tax refund. Any windfall that will not affect your monthly expenses should be used to pay off your balance.
- Declutter your life and sell what you are not using. Any profit that you will get from this sale should be paid towards your credit card balance. This will not only help you organize your home, it will also help you deal with your credit problems.