Making Minimum Payments Is Like Taking Out A Car Loan For Thirty-three Years!

A lot of people that have excessive credit card debt are making minimum payments. Knowing that puts a big smile on the face of the creditors! How come? So they can keep you in debt forever!

Your lenders arrange their offers of credit in such a way that entices you to only make the minimum monthly payment. They are going to try everything in their ability to get you to continue making minimum payments.

For example, your monthly statements do not state "maximum payment due", but alternatively "minimum payment due". They make use of the simple fact that a lot of people live paycheck to paycheck and it is less of a challenge for these individuals by making minimum payments.

Also, as long as you're making your payments when they're due, the creditors are quick to saturate you with deals of increased credit limits. They could care less if you got laid-off and have a collection of debts to pay! All they really want is to bury you further and further with debt.

Why would they want you making minimum payments? Because about 98% of the payment is applied to the interest, not the principal! This is the reason your balance seems to hardly ever decrease. For many, the total amount increases because of further charge card usage, fees, penalties, etc.

For this reason, if you have $30,000 of unsecured debt, and you are making minimum payments, plus your average rate of interest is 18%, it will take you about thirty three years to pay-off your debt! But your creditors will not disclose these details in your monthly statements.

If you took-out an auto loan and the loan officer told you that the time period for the $30,000 car was 33 years, what exactly would you think?

In order to demonstrate this, find creditcards.com. Click on "credit card calculator", then "minimum payment calculator", and input the specified data to find out the pay-off duration.

I personally cannot see any cause at all to keep making minimum payments. When you are overloaded with credit card, or other forms of unsecured debt (e.g. health care costs, collection accounts), there are other solutions and strategies which can be used.

To mention a couple, Debt Management aids consumers by negotiating with creditors to lower the interest rate. Also, for consumers that happen to be behind on their payments, the debt management counselor will also attempt to get unpaid interest, penalties, and late fees waived.

You may also consider Debt Settlement. This method helps consumers by negotiating with their lenders to considerably decrease the principal amount of debt that the debtor owes. By decreasing the balances, a debtor will be enabled to pay-off debts much faster compared to making minimum payments.

By not making minimum payments, nothing good can happen. There are many strategies to credit card debt elimination. You have to chose the most suitable choice for you.