My friend asked me to look at her monthly credit cards, she said, she stopped using this credit card and try to pay it off, but feels like she does not get anywhere.
Credit card in the record shows her balance is $ 5218.00 and it pays 18% of interest, and she pays the minimum payment at 3.5%, or $ 10 whichever is the higher. Like many others who confused with financial issues, she thinks that as long as it stops using the card and simply paying the minimum monthly balance, her credit card debt will be cleared shortly.
Result of calculation:
If she stopped using this credit card, and if it continues to make minimum required monthly payment, as it was based on its way bank calculates its minimum required monthly payment.
He would take her 181 months to repay its current credit card balance of $ 5218.00 and it will pay a total of $ 3762.35 interest.
In other words, if it continues to do what it does. It will take her 15 years, and its cost to repay its $ 8980.35 $ 5218.00 credit card balance. Not surprisingly, she feels like she does not get anywhere.
So, what it should do?
Actually, this break from the ordinary if it is in a position to pay the minimum payment of $ 5218.00, which is $ 181.37, which means it is affordable amount. Rather than pay the minimum payment, as determined by credit card companies, it continues to pay $ 181.37 since that time.
As a result, it will repay this credit card in 43 months instead of 181 months, and it will pay $ 1635.45 $ 3762.35 interest instead of interest, saving $ 2126.90 interest payments. See differently?
What she may have?
If she really wants to go for it, it might increase its "new" self-imposed minimum required monthly payment. For example, if it were to begin to pay additional $ 18.63 per month, totalling 200.00 per month.
It will repay this credit card at 34 months instead of 181 months, and it will pay $ 1428.30 $ 3762.35 interest instead of interest, saving $ 2334.05 interest payments.
If she were to begin to pay additional $ 68.63 per month, totalling 250.00 per month, it will repay this credit card in 26 months instead of 181 months, and it will pay interest instead of $ 1071.09 $ 3762.35 interest, saving $ 2691.26 interest charges.
If she really wants to eliminate her credit card debt as soon as possible, and its financial ability to support it, it could double the volume of its "new" self-imposed minimum required monthly payment. If she were to begin paying $ 362.74 a month instead of $ 181.37 a month, she could pay her credit card balance in 17 months.