Swiping a credit card is a great way to pay without cash, but it has gotten a lot of people into trouble with debt.
When using their credit cards, most people only think about whether or not they can pay the monthly payment. Many of them don't even try to figure out how long it will take to pay them off or how much they will cost them in the long run.
For example, a credit card balance of $2,000 doesn't seem like a lot. At an 18% interest rate, your monthly payment would be only about $40. Sounds like a pretty good deal right now, doesn't it?
Well, if you look at the numbers more closely, you'll see that about $30 of your payment goes toward interest. Actually, only $10 is added to the $2,000 balance every month.
If you only pay the minimum balance each month, it will take you more than 30 years to pay off that $2000. Thirty years is a long time. In that time, you'll also have paid back $5,000 in interest. So, if you add in the interest, your $2,000 credit card bill will really cost you $7,000 in the long run.
The payment listed above doesn't include the extra payment you'll have to make if you miss or are late with your monthly payment. In fact, many credit card companies want you to miss your payment so they can charge you extra interest and a late payment fee, which would usually make it take the rest of your life to pay off the debt.
There are a lot of credit card debt calculators on the internet, and you can use them to figure out how long it will take you to pay off your credit cards if you only pay the minimum amount each month. Most of the time, you will be shocked. And it's worth your time to look for ways to cut down on and pay off your credit card debt.
If you have too much credit card debt to handle, you may need to hire a debt consolidation company to help you pay off all of your credit card debts at once. They have a lot of experience dealing with creditors and can help you work out a better payment plan with them. If you want to pay off your credit card debts, stick to the plan.
Credit cards have made it possible to spend less cash and have become one of the easiest ways to pay for things while shopping or travelling. But if you don't use them wisely, you could quickly end up with a huge amount of debt that puts you in a financial mess. Simply put, credit cards are a very expensive way to borrow money. If you have to have one, pay off the whole balance every month so you don't get stuck in credit card debt.
