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Pay More Than the Minimum Payment - A Credit Strategy

Woman ShoeNice shoe Objects / Clothing Minimum Payments Are the Floor, Not the Ceiling

Let's say you're going on a well-deserved cruise, and you want to look your best. So you run to your favorite store, buy a piece of luggage, a couple of great outfits, evening attire and shoes - what wardrobe is complete without them - to die for. All together you spend $1,000 - why not, your worth it, and, besides, everything was on sale. Let's assume you place this on a charge card with 18% interest. If you make the minimum payment of $20 each month, it will take you over 8 years to pay for these items. The interest you pay will be around $1,000. Do you still think this is a sale?

For those who believe clothing is frivilous, substitue the luggage and clothing in this example for your usual purchases- tools, dinner at a restaurants, gasoline. Any way you picture it, 8 years and double the price is mind blowing.

Minimum payments are the least amount a credit card company will accept. Pay as much as you are able.

Posted by Sharon Brown on 04/19/2008 04:58 PM

Comments (3)

credit, mortgage, first time homebuyer, refinance, strategy, hudson valley, middletown, new york

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3 Comments on Pay More Than the Minimum Payment - A Credit Strategy

Listing the numbers like that really drives the point home; I think we all know that credit card charging is frivolous but don't always think about EXACTLY how much those charges will cost us.

04/27/2008 11:24 AM

by Tori Lynn Ross - Omaha's Premier Home Stager (Ross Designs, LLC)

Using a credit card is a convenience. But many times well have to pay for the convenience which can be costly. Thanks for pointing out exactly how costly it can be.

04/28/2008 06:54 AM

by DDR Realty, Orange County, NY

Tori and Derrick - You get it. When you see the numbers, you realize the ramifications of carrying debt. My point is that credit is good, if used responsibly.

04/28/2008 05:31 PM

by Property Management

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