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The True Costs of Credit Card Minimum Payments Infographic

Meeting the minimum monthly payments of your credit cards is like running on a financial treadmill. Sure — we’re all guilty of it; whipping out the ole’ credit card whenever cash is tight. In the long run, however, all those card swipes do count: if a cardholder made a minimum payment of $200 each month for a $5,000 credit card balance with an 18.9% interest rate, it would take 11 years and 5 months to finally pay off! When factoring in interest, the total credit card results come with a $8,109 price tag. Take a look at this infographic:

The True Costs of Credit Card Minimum Payment Infographic

 

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Consumers pay 62% more when they just meet the minimum payments of their credit cards. It can take significantly longer to pay for something than it would have had you simply saved up the money first.

Check your credit card agreement for how your minimum payment is calculated. The typical minimum payment is usually around 1% – 3% of the total balance owed. The interest is then factored in next month when calculating your minimum monthly payment, potentially even increasing your overall debt even as you’re making payments.

**Protip* Credit cards charge more in interest than you can typically earn in a retirement investment account, so get out of debt before you invest. Paying off the full balance sooner saves money in interest.

Once you’re out of debt, the money you would be spending on monthly minimums or might be paying service charges with can earn interest for you when you invest wisely. Any non-essential spending you can put on-hold in order to pay down debt s one of the best investments a person can make.

Items and Interest
Let’s look at how much you’ll really pay for what you want when you make minimum credit card payments on these popular items! The results may surprise you at an 18% interest rate, meeting minimum payments between of $15 or 2% of the balance.

iPad 2 by Apple
price: $399.99
minimum payment: $15
*It will take you 35 months to be rid of your debt. In that time, you will pay $114.66 in interest.

Canon EOS Rebel T3i
price: $425.00
minimum payment: $15
*It will take you 38 months to be rid of your debt. In that time, you will pay $132.57 in interest.

13‑inch MacBook Pro by Apple
price: $1,499.00
minimum payment: $37.48
*It will take you 153 months (12.75 years!) to be rid of your debt. In that time, you will pay $1,671.69 in interest.

All-Weather Outdoor 32 In. 720p LCD HDTV – Black by Sunbrite
price: $2,295.00
minimum payment: $45.90
*It will take you 317 months (over 26 years!) to be rid of your debt. In that time, you will pay $5,281.86 in interest.

The Credit Card Act of 2009
Credit card companies are now required by law to show you on your bill how long it will take to pay off your balance, making minimum payments how much interest you’ll end up paying.

*Protip: If you have more than one credit card, make minimum payments on all cards except for the card with the highest interest rate and pay that one off as fast as you can to maximise your savings.

If Credit Cards Worked Like Mortgages

If you paid a set amount regardless of your balance (ie. you pay $200 per month until the balance was paid), it would take you 32 months, rather than the 137 months it would take if the payment depended on a minimum balance. You would pay nearly 50% less in total interest.

Paying the minimum will keep your credit report in order, but that is exactly how the system is designed to generate profit for the credit card companies. They continue to profit while you continue to accrue interest.

apply now for debt relief helpIf you’re in debt, one of the best ways to improve your credit score is to tackle how much debt you have and lower your ratio of debt to available credit. This will usually raise your credit score.

In need debt relief? Contact us and discover your financial debt settlement options!

sources:
http://www.bankrate.com/calculators/managing-debt/minimum-payment-calculator.aspx
http://credit.about.com/od/usingcreditcards/tp/pay-more-than-minimum.htm
http://www.investopedia.com/financial-edge/0712/why-making-minimum-payments-gets-you-nowhere.aspx
blog.equifax.com/credit/making-minimum-payments-on-credit-cards-will-cost-you-in-the-long-run
http://credit.about.com/od/usingcreditcards/qt/minimumonly.htm
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By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/17/2021 Charlotte: I am calling because I wanted to ask a few quick questions about your experience with National Debt Relief [unclear 0:00:27]. JOSE: It’s good. Charlotte: Now before I begin, I have to let you know that our call is recorded. Can you tell me what actually made you decide to work with [unclear 0:00:40] National Debt Relief as opposed to other providers? JOSE: Good. Charlotte: What made you decide to work with National Debt Relief, as opposed to other debt relief companies? JOSE: Aside from your reviews, I’m guessing the success of the reviews. Charlotte: Tell me about the service and the program that National Debt Relief signed you up for? JOSE: I was able to collect all my debt into one chunk and then pay it off. Also was able to get settlements lower than what the balance was. Charlotte: How easy or difficult would you say the enrollment process was? JOSE: It was pretty simple. It wasn't difficult at all. Charlotte: Now is there anything about the process that you feel could have been improved? JOSE: Not at all. I think everything went smoothly. Charlotte: Perfect. Can you give me a little feedback on your experience with your negotiator? What did you think about your negotiator? JOSE: Negotiator was really firm and fair. Charlotte: Do you happen to remember the name of your negotiator by chance? JOSE: I do not, actually. Charlotte: Okay. Is there anything about that representative stood out [unclear 0:03:04] at all? JOSE: No, not at all. Charlotte: Perfect. How comfortable did you feel working with the negotiator through this process? JOSE: Very comfortable. Charlotte: Perfect. So if you had any questions or concerns, how did the negotiator work with you to resolve any questions or concerns that may have arisen? JOSE: At this point, I really didn't have any concerns at all. So, I mean, been doing a great job. Charlotte: Awesome. So if you were gonna rate your experience with National Debt Relief so far, on a scale of maybe one to five, and five would be that you would recommend to friends and one is you were pretty dissatisfied, how would you rate them? JOSE: Is 5 the highest? Charlotte: Yes, 5 is the very highest. JOSE: Okay. Then we’ll go with 5. Charlotte: Would it be okay if I posted your comments as a review on our public web site for National Debt Relief? JOSE: Yes. Charlotte: I will also send over a link so that you can have it as a record for yourself as well. And I have you at salvipride673@gmail.com. JOSE: Yes. Charlotte: How did National Debt Relief work with you as far as setting up a payment [unclear 0:04:45]? JOSE: They did pretty good. Like I said, I have no complaints at the moment. Charlotte: How comfortable were you with the amount that you were paying? JOSE: Very comfortable. Charlotte: Perfect. Now as far as your thoughts on the cost in relation to the quality of service you received at National Debt Relief, what would you say about that? JOSE: The service team was all right. Charlotte: Now if you were going to rate your experience on a one to five, five is that you would recommend to friends and one is you're pretty dissatisfied, how would you rate them? JOSE: 5. Charlotte: Perfect. Would it be okay if I posted a few of your comments to our website? JOSE: Yes. Charlotte: Now if a friend or a family member were asking you about National Debt Relief, what would you say? JOSE: Really great people to work with. Very quick and easy, very responsive, no issues. Really makes you feel like they’re there for you. So not a scam at all. Charlotte: Perfect. Now about where are you in the process at this point? JOSE: I've already had two creditors resolved already. Pretty happy about that. Charlotte: And of course, our call is recorded.

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Jose Perez
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