A Simple Way to Begin Eliminating Your Credit Card Debt Now!

Copyright 2006 Tony Mase

Recently, a friend of mine who, like many, is easily confused when it comes to financial matters, asked me to take a look at her monthly statement for a credit card she's been trying hard to pay off, but feels like she isn't getting anywhere.

I gladly took a look at her credit card statement and the very first thing I noticed, which almost floored me, is the interest rate she's paying

29.99%!

That's right

29.99%

Wow!

I don't know where I've been (obviously not looking at credit card statements :-)), but I thought this was illegal.

Her credit card balance is $5,141.06.

If she doesn't charge anything else on this credit card, which she hasn't been, and if she continues to make the minimum required monthly payment, as she has been, based on the way her bank calculates her minimum required monthly payment

It'll take her 339 months to pay off her current credit card balance of $5,141.06 and she'll pay a total of $12,345.65 in interest.

In other words

If she continues doing what she's been doing

It'll take her 28.25 years and cost her $17,486.71 to pay off her $5,141.06 credit card balance.

No wonder she feels like she isn't getting anywhere

She really isn't!

So

What should she do?

Well

There are a number of things she could do.

However

One of the simplest things she could do would be to continue making the same minimum required monthly payment she'll be making this month, every month from now on.

Why?

Simple

Because she's already in the habit of making a monthly payment of at least this much on her credit card.

You see

Most banks and credit card companies figure the minimum required monthly payment based on a percentage of the credit card balance due or a specific fixed dollar amount, whichever amount is higher.

Therefore

Generally, the minimum required monthly payment goes down as the credit card balance owed goes down until the minimum required monthly payment gets down to the minimum required dollar amount.

In her case

Her bank's minimum required monthly payment is 3.5% of her credit card balance or $10.00, whichever amount is higher.

This month her minimum required monthly payment is $184.93 of which $134.87 is interest, with only $50.06 applied to the balance.

If she were to do absolutely nothing else but make this $184.93 payment *every* month from now on

She'd pay off this credit card in 49 months instead of 339 months and she'd pay $3,749.46 in interest instead of $12,345.65 in interest, saving $8,596.19 in interest charges!

Big difference, isn't it?

Now

If she really wants to go for it

She could increase the amount of her "new" self-imposed minimum required monthly payment.

For example

If she were to start paying an additional $15.07 a month for a total of $200.00 a month

She'd pay off this credit card in 42 months instead of 339 months and she'd pay $3,191.78 in interest instead of $12,345.65 in interest, saving $9,153.87 in interest charges.

If she were to start paying an additional $40.07 a month for a total of $225.00 a month

She'd pay off this credit card in 35 months instead of 339 months and she'd pay $2,574.37 in interest instead of $12,345.65 in interest, saving $9,771.28 in interest charges.

If she were to start paying an additional $65.07 a month for a total of $250.00 a month

She'd pay off this credit card in 30 months instead of 339 months and she'd pay $2,165.81 in interest instead of $12,345.65 in interest, saving $10,179.84 in interest charges.

If she were to start paying an additional $90.07 a month for a total of $275.00 a month

She'd pay off this credit card in 26 months instead of 339 months and she'd pay $1,874.29 in interest instead of $12,345.65 in interest, saving $10,471.36 in interest charges.

If she were to start paying an additional $115.07 a month for a total of $300.00 a month

She'd pay off this credit card in 23 months instead of 339 months and she'd pay $1,654.79 in interest instead of $12,345.65 in interest, saving $10,690.86 in interest charges.

And so on.

Now

If she really, *really* wants to go for it

She could double the amount of her "new" self-imposed minimum required monthly payment.

If she were to start paying $369.86 a month instead of $184.93 a month

She'd pay off this credit card in 18 months instead of 339 months and she'd pay $1,254.35 in interest instead of $12,345.65 in interest, saving $11,091.30 in interest charges.

Huge difference, isn't it?

As I said above, there are a number of things she could do, but this is one of the simplest and it's something she can start doing right *now* to begin eliminating her credit card debt

And

So can you! :-)

If all you do is stop charging on your credit card and continue making the same minimum required monthly payment you'll be making on your credit card this month, every month from now on, you'll make significant progress towards totally eliminating your credit card debt once and for all.