Paying more than the minimum on your credit cards

Hello-

If you want to get out of credit card debt without using any type of debt relief program such as debt consolidation or debt negotiation you have to pay more than the minimum on your credit cards.

But you know this already right?

If you took the time to calculate your debt payoffs then you’ll understand why it is so important to pay off your debts quickly.  If you want to avoid paying thousands of dollars in interest charges to your credit card company you need to pay much more than the minimum.

I’ve been doing this a lot more lately.

When I get my Discover Card statement in the mail, the only transactions I see are my finance charges and several payments that I’ve made to them.

For the past 3 months, there has been at least 3 payments made for each month.  Two months also have me making 5 payments.  And the amounts I am paying are not huge either.

These are payments I made for the month of May for example:

$42.00

$46.61

$30.00

Those are the small ones, then there was a couple of bigger ones:

$130.00

and

$317.75

The minimum payment for May was only $76.  I paid over $567.  Hopefully, in just a few short months, I will finally get this card paid off once and for all.

Whenever you get any extra money I would suggest sending that to your credit card company before it has a chance to burn a hole in your pocket and get spent on another frivolous purchase.

When you keep hacking at your debts and making credit card payments several times a month, you always have the thought of getting out of debt in mind and it helps to control your spending in a way.

You get in a more frugal frame of mind which is required for paying off huge credit card bills.

If you need more tips on how to be frugal and reduce your spending, check out this post from Zen Habits that offers 50 tips for frugal living

Keep hacking away at your debts and we’ll talk soon.

Have a great day!

Adam – The Credit Blogger

Free credit card payment calculators

Hello-

Do you know how much your debt is costing you?  Have you seen the numbers of how long it will take you to pay off your debts if you just pay the minimum?

There are several credit card payment calculators available to give you the sobering news about your credit card debt.

Here are a couple free calculators from Bankrate that give you the details of how long you will be in debt if you just pay the minimum:

The true cost of paying the minimum:

http://www.bankrate.com/brm/calc/MinPayment.asp

This shows you how much money you are throwing away when you do not pay off the balance each month.

Here’s another one from Bankrate that helps you calculate what it will take to pay off your credit cards in a specified period of time.  Say you want to be out of debt in 3 years, it will figure out how much your payments need to be each month.

http://www.bankrate.com/brm/calc/creditcardpay.asp

So for example, if you have about $56,000 worth of credit card debt and your interest rate is about 12%, you will need to make payments of $1860.00 every month to pay off your credit cards in 36 months.

For people with that same amount of debt but with a much higher interest rate, say 18%, it would require $2024.53 every month to get out of debt.

And let’s say you have an even higher interest rate, which I know many people do, like 29% APR, $2346.72 every month is what you would need to pay.

Here’s another free calculator from CNNMoney and it gives you a graphical representation of the same information for those of you who like pictures and graphs.

http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp

And here’s my graph for just paying the minimum each month:

debt free in 34 years

According to this chart, I’ll be debt free in just 34 years and 4 months and will have paid over $46K in interest charges.  Ouch.

So do yourself a favor and run your numbers real quick and see if that motivates you a little bit more to get out of debt.

-Adam