Paying off Credit Cards With Minimum Payments?Written by Johann Erickson
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If you are charged interest with adjusted balance method credit card company will subtract any payments you made from your previous balance before calculating your interest charge.
Okay, if your balance credit card company is using to calculate your interest charges is $2000, they will take that figure and multiply interest rate or APR, if we say APR is 17% then we are at $340. Then this figure is divided by months in a year or 12 months. So, that amount would be $28.33.
Now, in beginning, you paid minimum payment of 2% which was $40 on $2000, and then credit card company added interest rate of $28.33 to your balance. So, your new balance is $1988.33. So, really you are only paying $11.67 against your balance rest goes for paying for interest. So, paying back your debt of $2000, at this rate will take you 172 months, or a little over 14 years.
As you see, if you only make minimum payment each month you will be in debt for quite awhile according to what your debt is. It would be wise to pay extra each month to ensure that your balance does go down instead of staying close to same after they had interest. Try to calculate and add into your budget interest rate and pay that along with your minimum payment amount if you really want to see a decrease in your balance due.
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Johann Erickson is a contributing writer for sites such as Helpful Home Ideas. Please include an active link to our site if you'd like to reprint this article.
| | Transferring balances Between Credit CardsWritten by Johann Erickson
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It is a good idea to transfer your balance if you are sure that monthly payments will in fact be lower and you will not be paying for several years to come because of change in interest rate after introductory special rate. You should also learn about annual percentage rate and how it is calculated. Do they offer a fixed rate that can only be changed in writing prior to charging new rate, or is their interest rate a variable rate that changes with national average?
Before you just run out and transfer your balances read and learn what it means to you in your situation right now. Will it lower your monthly payments at present time when times are tough, but increase monthly payments down road when your situation has changed? Such as an accident that has caused you to be unable to work at present time, but you will be returning to work and will be able to pay higher payments at that time. All of these things should be considered. Not every situation or individual is same and their debt is same. What might be perfect for one person may not be for another.
For more information about your credit cards or debt consolidation, please visit us at Helpful Home Ideas.
Johann Erickson is a contributing writer for sites such as Helpful Home Ideas. Please include an active link to our site if you'd like to reprint this article.
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