September 20, 2017
 
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Paying Off Your Credit Cards

Is paying off the minimum on your credit cards bad?

Getting a credit card has never been easier, there are some banks that don't even care if you have income or assets, they will issue you a credit card. Credit card companies will throw multiple credit card offers to students and recent graduates for example, and many individuals will get in deep financial trouble without even trying. With over half of the American population with less than $2,000 for an emergency fund this is a serious problem.

Even if you're stuck with mass amounts of credit card debt don't get comfortable getting stuck in the cycle of paying the minimum payments on your credit cards, that would be a real big mistake. Check out any credit card minimum payment calculator online and you will see that in the long run you are going to be paying a ton of interest and it will take you an extended time to payoff your credit cards.

For example:

Credit Card BalanceCredit Card Interest RateMinimum Payments
$50,000.009%2% of balance.

It will take you 397 months to be rid of your debt. In that time, you will pay $29743.47 in interest.

Although the average American Household only has over $15k in credit card debt this example reflects how somebody can get into a very financially detrimental situation. $50k in credit card debt would take over 33 years to payoff, and you would be paying almost $30k in interest, banks will happily take the minimum payments especially if they get a 50% return on their money so it's up to you to take financial responsibility and pay down your credit cards as much as possible.

CreditCards.com's Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 14.91%
14.91%
14.95%
Low interest 10.40%
10.40% 10.40%
Balance transfer 12.46%
12.46%
12.71%
Business 12.67%
12.67%
13.13%
Student
13.31%
13.31%
13.77%
Cash back  14.24%
14.24%
14.61%
Airline  14.63%
14.63%
14.54%
Reward 14.75%
14.75%
14.78%
Instant approval 15.49%
15.49%
15.49%
Bad credit 23.64%
23.64%
23.41%
Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. Introductory, or teaser, rates are not included in the calculation.
Source:CreditCards.com
Updated: July 18, 2012
 
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