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Credit Cards Loans Interest Rates Making Them Work for You

29 May, 2015

It’s not often but once in a great while the government actually passes a law that makes
sense and does help the general American public.  Within the last couple of years a law
was passed that mandated that credit card statements show how long it will take to pay
off the balance if only the minimum payment is made each month.  It also shows you how
long it would take to pay off that balance if you paid a little more than the minimum.  I
hope most people already understand this, but just in case I want to explain exactly what
those numbers are telling you.  Let’s look at an example to do this.  Let’s say you have a
balance of about $4,400 and a 25% interest rate.  Your minimum payment would
probably be about $120 per month.  The payment to pay it off in about 3 years would be
about $175.  The chart would tell you if you only make the minimum payment it would
take you about 18 years to pay off the balance.  What you need to understand here is
that they mean if you keep only making the minimum payment stated on each new
statement.  This of course means that your payment would actually go down every month
and that is why it takes you so long.  It would cost you a mere fortune in interest to just
keep making the minimum payment and this should be avoided at all costs.  The chart
also shows you that the difference in interest paid between the 3 year plan and the 16
year plan is almost $10,000.  To pay off all your charge cards as quickly as possible you
need to add up what all your payments were this month and then make sure your total
payments next month equal the same amount.  Except now you pay the minimum to all
your bills except for the lowest balance, high interest card you have.  To that card you
send the entire balance of what your total payment last month was minus what you paid
to the all the other cards this month.  That will cause you to start paying the principle
down much faster on the smallest balance and therefore pay that card off the fastest.  
Then once you have paid off one of the cards you start applying all the money that was
being paid to that card to the next lowest balance card.  Hope this proves to be helpful to
those of you trying to pay off those credit cards.  Watch for a future article which will talk
about all the damage interest actually does to your financial future.  Unfortunately there
is at least one firm out there who will sell you this “secret” (their term not mine) for just a
few hundred dollars.  Do yourself a favor, re-read this if you didn’t quite get it and feel
free to email me if you find I didn’t explain this clearly enough.

As a final note, to find more money to help pay those balances faster I would like to
mention a site where you can save money on everyday purchases.  You might want to
check out the site



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