When you receive your monthly statements there is a great temptation to pay only the minimum due. Do not do it. Please review your statement and look for information on how soon you can pay off the account balance. If you only pay the least possible payment, it may take years, even decades, to finish repaying. It is advisable to always pay your balance off every month or try to pay more than the minimum amount. This will help to establish a good credit rating, a score that financial institutions use to determine the rate you pay on your loan.
Real life examples:
Imagine that you are 18 years old and spent $1,500 on clothes and DVDs with your credit card interest rate of 19%.
If you pay just the minimum amount each month, and as a minimum equal to 4% of your outstanding balance (the lowest amount allowed by certain issuers), your down payment will be $60.To pay off the debt it will have more than 26 years. That equals 106 payments, and you will accrue over an additional $889 in interest. These numbers provided are true only if you do not buy anything else with the card and there are no other fees (e.g., late charges).
If the lowest payment is based on 2.5% of the outstanding balance, your payment will be $37.50. When you settle the debt it will be more than 35 years. That equals 208 payments, and have paid more than $2,138 in interest even if it did not charge anything to the account or other fees are charged.
Wondering how long it takes to pay off your debt? Depending on the information you provide, the payment calculator credit card helps you determine how long you settle the balance of your credit card.