The Biggest Money Trap: Minimum Payments
There are many people out there who think they are doing just fine financially. They are using their credit cards a lot, but they are making minimum payments every month to all their credit cards. In fact, they never miss a payment. it's just that they want to live a good life and in order to support that life they feel that they have to get what they want, when they want it, even if it means putting it on credit. But they are OK because they are paying the credit card right? Wrong! Paying the minimum on a credit card is the worst thing you can do.
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Helpful Loan Tips:
- Apply with more than one company to compare offers.
- Study your options before committing to a debt program.
- Cut out small luxuries to pay down debt at the beginning of your debt reduction program.
Minimum Payments
Minimum payments are just that; minimum. They are actually only 2% of your total balance, which, in the grand scheme of things, is not very much at all. Some people think this sounds great, but think about it this way 2% of $2000.00 is only $40 dollars! That is not making a dent in your debt at all.
How long does it really take?
Let’s say you have a credit card with a $1000 balance and a 20% interest rate. Your minimum payment is $20 a month. So every month for a year you pay that minimum payment and at the end of the year you paid $240 to your credit card. So your new balance should be $760 right? Well not exactly, you forgot about interest. Your annual rate was 20% so you balance is actually $902, meaning you only paid $98 off of your balance! This will take you years to pay off. Do you really want to be paying for a bunch of meaningless stuff like clothes and DVD’s for several years? Probably not considering they are only $20 or $30 dollar each anyways.
How to break this cycle
First of all, you need to stop using your credit cards; nothing is worth ruining your future. Secondly, you need to pick the card with the highest interest rate and focus all of your extra money to this card. You may not be able to go out to eat or to the movies for a while, but you need to pay this off. You can pay the minimum on the rest of the cards. Once you have finished with the first card, cancel it and move on to the next one. It may take all the willpower you have, but it is necessary to do this in order to get out of this cycle.
Our Recommended Debt
Consolidation Lenders: Top Recommended Companies To Refinance With:
(updated ):
Act Now! Lower your monthly mortgage payment!
- Competitive rates and no hidden fees
- Bad Credit OK
- New Purchases, Home Equity & Refinance
- One dedicated mortgage banker from first call to closing
- Quick Application with worthwhile results
If you are looking for a mortgage loan but have "less than perfect credit" this company has options for people with credit problems. Complete a short form and get one dedicated mortgage banker from first call to closing with a simple, straightforward process.
Mortgage rates are still low. Refinance & Lower Your Payment!
- Get Started on a Lower Payment Now!
- America's #1 Online Lender
- Save More and Spend Less!
- No Obligation and Free Expert Advice Another Great "bad-credit" Mortgage Company! QuickenLoans is also a competitive mortgage company for people with all types of credit including poor credit. Refinance or get new mortgage offers from this reputable Web based mortgage lender.
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