As the holiday season winds down, many people will open their mail to find higher than normal credit card bills. Some of these bills will come with generously disguised offers to skip your next payment or suggest only a minimum payment. While it may be tempting to take advantage of these invitations, the truth is, it will cost you a lot more in the long run.
Consider the numbers in the following table as you decide how you're going to approach your credit debt and the value of skipping or making minimum payments.
The Cost of Paying the Minimum
| Credit Card Balance |
$8,000 |
| Minimum Monthly Payment |
Interest +1% |
| Minimum Payment Allowed |
$10 |
| Interest Rate |
18% |
| Months to $0 |
360 (30 years) |
| Interest Paid |
$11,616 |
| Total Payments |
$19,616 |
The above calculation assumes you will not be making any new purchases with this card.