We're assuming a $5000 account balance, a 17% APR interest rate, and a minimum payment that is either 3% of your balance or $15, whichever is greater.
If you pay only the minimum as indicated on your statement, your card will be paid off in December 2024. That date is 191 months or about 15 years away. By paying only the minimum, your $5000 balance will incur $4207.79 in finance charges. Altogether, your $5000 balance will cost you $9207.79 to repay. Your monthly payment will start out at $150 and will gradually decrease until your balance reaches $500, at which point your payment will be a constant $15.
But what if you freeze your monthly payment amount at $150, the current minimum? How will the picture change if you pay $150 every month until your card is paid off? For starters, your card will be paid off completely in December 2012. That day of rejoicing is 47 months or about 3 years away. This is 144 months sooner than if you had paid the minimum each month. By keeping your payment frozen at $150, your $5000 balance will now incur only $1814.79 in finance charges, a savings of $2393! Altogether, your $5000 balance will have cost you only $6814.79 to repay. Much better!
Copyright 2009, Cameron Communications Corp.