How much in interest charges does a credit card balance accumulate over the years? This can be illustrated using the following assumptions: (1) The current balance due on a credit card is $3,000; (2) the card will not be used any longer; and (3) a monthly payment of exactly $100 will be made each month until the balance is paid off.
As the above table illustrates, a person with a 9% APR credit card will pay less than half the interest rate than a person with a 17% card. Naturally, increasing the monthly payment will result in less interest charges and a quicker pay-off; however, paying only the minimum required payment each month will significantly increase the amount of interest and pay-off period. How much? The table below uses the same terms given above, except the monthly payment has been reduced to $50. Notice the increase in pay-off time and interest:
Pay off your credit card debt as quickly as possible. Give up purchases you don't need so that you have an extra $20, $30, $40 or more to pay towards your credit card debt each month.
