See how increasing your monthy payment reduces interest costs
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When you look closely, minimum payments for credit cards are mostly made of of interest. Very little of the payments goes to pay down the principle, meaning it will take a longer time to pay off your debt and you will end up paying more in interest charges. Paying off or reducing the amount owed on credit cards can potentially save you thousands of dollars in credit card interest.
Use this calculator to estimate the payment required to pay off your credit card debt in a specified number of months or calculate how long it will take to pay off your card given a specific monthly payment.
For example, let’s say you owe $10,000 on a card with a 17.50% interest rate and a minimum payment of $250 (2.5%). If you don’t incur any more charges on the card and continue to make the $250 monthly payment, it will take you 5 years to pay off the card and cost you $5,117 in interest. If you double the monthly payment to $500, you will pay off the balance in only 2 years and pay $1,909 in interest. You will be out of debt three years sooner and you will save $3,193 in interest charges.
The lesson here is that every little bit counts. Paying twice your minimum or more can drastically cut down the time it takes to pay off the balance, which leads to lower interest charges.
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