Question: How long would it take someone to pay off a credit card by applying only the minimum amount due each month?
Answer: It all depends on the size of the balance you're carrying on the card and the card's minimum percentage due, but on average, it'll take about half a lifetime. Most cards have a minimum due of between 1.5% and 2.5% of your outstanding balance. Let's say that you owe $4,500 on your card. If so, it can take you about 44 years to pay it off -- and you'll end up paying a total of $17,000. Yowza. That's a pretty powerful demonstration of how vital it is to pay down your balance as much as possible, as quickly as possible.
Think of credit card debt as the opposite of investing. Instead of earning, say, 10% on your money, someone else -- in this case, the credit card issuer -- is earning that money from you. (And credit card issuers aren't even content with 10% -- they frequently charge 15% to 30% or more in interest.) With credit card debt, you're digging a deeper and deeper hole instead of building a pile of wealth by investing in companies such as Inside Value pick Home Depot
If you or someone you care about is mired in credit card debt, dig out from under it. You can do it. Many Fools have done it. Learn more in our Credit Center. Our credit calculators are handy tools, too.
The following articles can also help you:
- Living on Borrowed Dimes
- Credit Cards Sabotaging Mortgages
- Beware of Canceling Credit Cards
- $24 Billion to Card Companies. for What?
- Sneaky Credit Card Tactics
You can also read about all things credit-related on our Consumer Credit/Credit Cards discussion board.
Finally, don't let yourself get washed out financially and lose out on a comfortable retirement. Begin planning now. We can help you reach your dreams with our Rule Your Retirementnewsletter. It's issued each month, is readable in a single sitting, and contains lots of valuable tips as well as inspiration and motivation. You've got little to lose and a lot to gain by trying it for free.
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