Paying the minimum repayment on a credit card is a trap that all to many of us fall into and it is a trap that unfortunately will take years and years to come out of if one continues to make only the minimum repayments on a credit card.
Low interest, high interest, rewards, balance transfer and instant approval credit cards are all the same when it comes to the minimum repayment trap and should be avoided at all costs, particularly if a consumer is focuseed on paying off the credit cards.
Lets face it minimum payments exist and people continue to make them because credit card minimum repayments are easy. Credit Card minimum repayments can be made without effort, without thought via direct debit. Although this is easy and is good as a fail safe method, it should not be relied on to totally pay off credit card debt as it will takee far longer to pay out than by even choosing an amount just $10 more than the current monthly minimum and repaying that amount each month.
Have you ever considerd why it is that the minimum repayment is often the most prominent figure on your credit card statement? Many credit card lenders would happily have you believe that the credit card minimum repayment is the only repayment you can make but this is certainly not the case. Why on earth would credit card lenders be happy with just the minimum repayment from credit card users? Quite simply because the more consumers that make minimum repayments on their credit cards the more money the lenders make from each one of these consumers.
Even if a consumer was dedicated to paying off the credit cards and did not make future purchases, repaying the outstanding balance bu making only minimum repayments on the credit card would take much longer than setting an amount higher than the current minimum and sticking to it as a monthly payment. This is because, minimum repayments are calculated as a percentage of the total amount outstanding. As the total amount outstanding reduces so does the minimum repayment – ensuring the maximum interest can be charged by the lender over a maximum period of time.
For this reason it is always better to make sure that the payments are significantly more than the credit card minimum repayments every month, in order that the credit card debts do not go out of control.
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