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Credit Help for Buying Houses: 14 Common Credit Mistakes
Get the credit you need to buy real estate. Qualifying for a real estate purchase requires different credit than automobile financing or retail credit.If you plan to finance real estate, either as a home buyer or as an investor, these credit tips will ...
How To Repair Your Credit Report
A credit report is run on a buyer when he or she needs to buy something that will take a long-term loan, such as an automobile or a house. The credit report can come from one of three agencies – Equifax, Experian, and Trans Union. Each of these three ...
My Credit Report
"What kind of information is on my credit report -and how can I see it?" is a common question among people who have had trouble securing credit or loans. Basically, your personal credit report is an electronic record of all of your credit activity ...
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The truth of the matter is that it can make an enormous difference. The minimum payment is the perfect amount to ensure you will be paying on your balance for years and years to come. In the end, you could be paying several times more than your original balance in interest charges alone. It may not seem plausible, but it’s hard to ignore when you have the numbers right in front of you. Here are two examples of what happens when you make only the minimum payment on your credit card:
Let’s say you have an meager $1,000 balance on your credit card, which has the average interest rate of 18%. Your minimum payment is $20 per month. If you pay the minimum payment, you will be paying off this balance for eight years, and you will pay more than $850 in interest charges.
However, most people have far more than $1,000 in credit card debt. Let’s try the more realistic balance of $5,000. Paying the minimum payment on this balance with an interest rate of
18% will result in a total payoff in approximately 35 years. In that time, you will have paid almost $13,000 in interest charges alone.
These numbers can be frightening, but there is something you can do. You don’t have to pay much more than the minimum to start seeing big changes in your balance. Let’s try these numbers again, this time paying slightly more than the minimum payment.
On the $1,000 balance at 18% interest, try paying $30 per month instead of the minimum of $20. Now you will only be paying on this balance for less than four years and you will pay less than $400 in interest charges.
On the $5,000 balance at 18% interest, bump the payment up to $125 per month. At this rate, you will pay off your balance in about five years, and you will pay approximately $2,500 in interest charges. You could save over $10,000!
As you can see, paying the minimum payment might seem more affordable at first, but in the long run, you will pay dearly for it in interest charges. Just increasing your payment by a little will make a big difference. The more you increase your payment, the less time and money you will spend trying to pay off your credit card debt. Do yourself a favor and don’t fall into the trap of making minimum credit card payments.
For more information on Debt Consolidation Loans and Credit Repair Tips, please visit us at Helpful Home Ideas.
About the Author
Johann Erickson is the owner of Online Discount Mart and TV Products 4 Less. Please include an active link to our site if you'd like to reprint this article. He is also a contributing writer for sites such as Helpful Home Ideas
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