Don’t Pay Only the Monthly Minimum on Your Credit Card-Part Two
You may think that when you pay on time the minimum amount due on your credit card at the end of each month, you’re being financially responsible. Think again. In our first episode we talked about how does the long repayment works.
This episode will go in depth regarding how paying only the minimum monthly payment can cost you a huge and unnecessary amount of interest in addition to repaying the original sum.
Skyrocketing Interest
Say you’ve got an outstanding balance of $2,000 on your card. Your minimum payment would initially be $40 (2% of $2,000).
If you make only the minimum monthly payment of $40, it would take you 30 years and 10 months to pay off your balance and you would end up paying $4,931 in interest!
You would be much better off financially if you could increase your monthly payment to $100. So then, you would need only two years to pay off the balance in full and you would pay only $395 in interest!
That’s a saving of $4,535 !
So, upping your monthly payment by even a small amount can save you a whopping amount of interest.
In our final episode of this series we’ll discuss how the minimum payment is applied.
0 comments:
Post a Comment