Eliminate credit card debt by paying more than the minimum balance.

One of the simplest and most efficient ways to reduce and pay off credit card debt is to pay more than the minimum amount each and every month. If you make only the minimum monthly payments on your credit card debt, it will be very hard, if not impossible, to get out of debt.

It is true that statistics show that the average person has about nine credit cards. And the average person has a total balance of about $7,3000 on those cards, and the average interest rate is about 14 percent. People should try to consolidate their credit card debt whenever possible to reduce the number of cards, and ideally interest rate.

Another shocking statistic is that many people continue to make only the minimum payments on their cards. The results of making the minimum monthly payments is an almost certain future of financial hardship for you and your family. At the same time, you will be lining the banks and other financial companies with windfall profits.

This table below shows what happens when you make only the minimum payments, and you can compare that to making that minimum payment and also paying additional towards your credit card bills and  debts.

 

 

How much do you save on debts by paying more than minimum

Example is that you owe $7,200 on your credit cards, with an interest rate of 18%.

Monthly payment Total interest paid Total paid, including principal and interest Time in years until debt paid off Minimum each month $19,895 $27,095 41 $144 $6,297 $13,497 8 $261 $2,184 $9,384 3

 

 

 

 

So if you only make the minimum payment, it will take you 41 years to payoff your credit card balance in the first row. And for borrowing $7,200, you will end up paying a total of $27,000. So you will have to pay back almost 4 times the amount that you borrowed.

Compare that to paying a fixed $141 per month in example (row) #2. You can be out of debt in a “mere” 8 years. And if you increase your monthly payment to $261 per month , you can be out of debt in a fairly rapid 3 years.

Lets put this in perspective. Many people shop for the lowest prices when buying a product, or comparison shop. People do what it takes to find a “good deal.” So you spend time shopping, try to save money, then end paying thousands of dollars in interest costs. So much for the time spent finding a good deal. Think about it this way, when you make the purchase using your credit card, and pay any amount of interest, no matter how small, that good deal or cheap price just vanished. Find the best credit card deals. More.

So lets use this in the example above. The products you purchased for $7,200.00 ended up costing you over $27,000, and almost $20,000 in interest alone.

If you do need to use a credit card, you need to be sure to pay more than the minimum amount due each month. If you do not want to use a debt management plan or find other assistance, then the best way to win the battle with your your credit cards is to pay of all of your credit cards. You need to control your spending and behavior to get out of, and stay out of debt.