Save Money After Holiday Buying By Paying More Than The Required Amount On Your Credit Cards

It may look like you’re saving money by paying the minimum amount due on your credit card, the truth is, you’re really spending much more. This time of the year more than others, the temptation to only pay the required balance and convincing yourself you’ll have more cash to spend on presents and yuletide greetings is a problem for a lot. No matter the amount of debt you currently have, this data will show you the importance of paying more than the required – something that could save lots of dollars over time. How’s that for a stocking stuffer?

Over time I’ve been questioned lots of times if it is cheaper to have a debt consolidation loan or many credit cards, some with no interest. The first step you need to decide is how quickly you want to pay the debt off. The best piece of knowledge is that you pay it off as efficient as possible. Let’s have a look at the effects of making the required monthly payment on a credit card.

Currently lots of credit card companies are being friendly and allowing even lower minimum payments you may say this is a good thing. And you might be right if you are really down, but beware, it is costing you a fortune over time, which of course is why they do it. Yes, I know it is a shock, you thought they were just being friendly! Unlike a debt consolidation loan that has set monthly payments (Assuming rates don’t change), you can vary the monthly charge on a credit card. For example, if you have a credit card balance of 3,000 with an interest rate of’ percent (Annual Percentage Rate) and the minimum charge allowed is 3%. In this case the required monthly charge is 90. By making this charge and not using the card for anything else, it will take 12 years and 5 months to pay off this card, and you will have paid a total of 2,714.16 in interest!

The next month you receive a letter with your statement saying that you are such a good customer they are going to reduce the minimum charge to 2%. Nice, you think, I’ve only got to pay 60 month and I can spend another 30 down the pub. But lets see at what you are really paying. By making the new minimum charge only, it will now take you 28 years and 5 months to pay off your debt and you will be spending a whopping total of 7,845.73 in interest. This is an extra 16 years and 5,131.57 in extra interest, rather an expensive trip to the pub I would say. So, maybe the credit card company isn’t being so nice after all, maybe a debt consolidation loan with it’s higher monthly payments isn’t such a bad thought.

Oh yes I can hear you wondering, but what about the credit card with zero interest, well, that is another topic, but basically most people forget to change at the end of the period and end up with high interest.

So I would recommend you to pay more than the minimum payment and pay of the credit card debt as soon as possible. If you’re not able to pay even the minimum, a debt consolidation loan with a smaller interest rate and a shorter term or debt settlement may be options to look at.

Does holiday spending have your credit cards maxed out, debt relief from Debt1Options is a great way to lower credit card debt today.