Pay Off Credit Card Debt – How to Calculate the Cost?

You got a stick and lost your job. A business deal went sour. You didn’t realize how much you were spending.

For whatever cause, the amount $10000 USD is the figure on the full balance due on your credit card bill. But you’ve been capable to afford that minimum payment of about 200 USD each month. You only utilize the card to shop gas and purchase dinner each now and then. The balance just never looks to go down though and actually grows bit by bit.

  • What is that $10K really going to cost you?
  • Have you ever tried to calculate it?

With the new card law which just went into effect, the credit card firms have boosted rates and lowered credit lines. An interest rate of 28 percent is not infrequent and credit card news reports have a few credit card rates in excess of 70 percent.

Let’s go back to the 10k USD example because it’s one that fits an extremely normal condition. if you use one of the above calculators you’ll find that if the rate is 18.9 percent which looks to be a usual rate for a primary calculation, the minimum charges is 600 USD. If you just pay the minimum of 200 USD each month. It’ll take 53 years to pay off your all balance, even if you make no more fees and make only the minimum payment on time every month. The really, really worst news is that you’ll pay $34,336 just in interest only to pay back 10k USD!

In one more example, the full debt is 30k USD at that similar 28 percent. The calculator reports:

Based on the info you are given and assumptions that we utilized to calculate the period to repay your money, we estimate that you’ll never pay off your card balance if you only make the minimum payment because is less than the interest charged every month.

If the 30k USD were only at 18.9 percent with a minimum payment of 600 USD, it’d take 70+ years and cost $108,450 in interest.

By now, it’d be extremely clear why the credit card business has become so big and also why the failure rate is very high. People who’ve held on now for a year or 2 are reaching the spot where easily cannot make it much further.

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