Published in The Voice.
The secret credit card companies do not want you to know
By Sharon Weltz
The average college student will graduate with $3,000 in credit card debt and their credit card company will graciously allow them all the time they need to pay it off, as long as they are making minimum monthly payments.
Sounds like a great deal, right? Wrong.
Credit card companies do not want you to pay off your debt. As long as you are in debt, they are making money. Here are the facts.
Let’s say you decide to pay off that $3,000 balance on your credit card. You quit using your card and faithfully remit the monthly minimum payment. How long will it take to pay off that $3,000? Well, it depends on what Annual Percentage Rate (APR) your credit card company is charging you.
If your APR is 12 percent, it will take 15 years to pay off the balance, and cost extra $2,394 in interest charges.
If your APR is 19 percent, it will take 30 years to pay off that $3,000, plus an extra $8,598 in interest charges.
If your APR is 29 percent, you will never pay off your balance because the interest charged is more than the minimum payment due.
This is unacceptable and here’s how to take charge. The Federal Reserve has an online Credit Card Repayment Calculator that will allow you to calculate how to shave years off your repayment schedule and save thousands of dollars in the process. Here’s how it works.
Let’s say your goal is to pay off your balance in four years. How much money should you remit to your credit card company each month to meet your goal?
Enter your $3,000 balance and 12 percent APR into the online Credit Card Repayment Calculator. At the click of a mouse you take back control, because you will now know that if you remit $80 each month to your credit card company you will pay off your debt in four years and pay only $793 in interest, instead of $2,394.
Take back control, save money and shave years off your debt repayment schedule by visiting and using the online Credit Card Repayment Calculator at www.federalreserve.gov/creditcardcalculator.
The average college student will graduate with $3,000 in credit card debt and their credit card company will graciously allow them all the time they need to pay it off, as long as they are making minimum monthly payments.
Sounds like a great deal, right? Wrong.
Credit card companies do not want you to pay off your debt. As long as you are in debt, they are making money. Here are the facts.
Let’s say you decide to pay off that $3,000 balance on your credit card. You quit using your card and faithfully remit the monthly minimum payment. How long will it take to pay off that $3,000? Well, it depends on what Annual Percentage Rate (APR) your credit card company is charging you.
If your APR is 12 percent, it will take 15 years to pay off the balance, and cost extra $2,394 in interest charges.
If your APR is 19 percent, it will take 30 years to pay off that $3,000, plus an extra $8,598 in interest charges.
If your APR is 29 percent, you will never pay off your balance because the interest charged is more than the minimum payment due.
This is unacceptable and here’s how to take charge. The Federal Reserve has an online Credit Card Repayment Calculator that will allow you to calculate how to shave years off your repayment schedule and save thousands of dollars in the process. Here’s how it works.
Let’s say your goal is to pay off your balance in four years. How much money should you remit to your credit card company each month to meet your goal?
Enter your $3,000 balance and 12 percent APR into the online Credit Card Repayment Calculator. At the click of a mouse you take back control, because you will now know that if you remit $80 each month to your credit card company you will pay off your debt in four years and pay only $793 in interest, instead of $2,394.
Take back control, save money and shave years off your debt repayment schedule by visiting and using the online Credit Card Repayment Calculator at www.federalreserve.gov/creditcardcalculator.