Everyone has bills to pay, and most people try to make sure they pay those bills on time each month. While failure to pay the electric or water bills might mean those services get cut off temporarily, failing to pay other bills, like a mortgage or a car loan, might result in even greater consequences, such as foreclosure or a car being repossessed. But what about credit cards? What are the consequences for those bills? Will paying the minimum payment each month ever get you out of credit card debt?
Some of our readers may have noticed in recent years that credit card companies have started to put some calculations on their monthly statements. For instance, most credit card statements will have the following: one figure that shows how long it will take to pay off the balance by paying the minimum payment each month, and one figure - significantly higher - that shows how the balance can be paid off in three years.
For example, an Escondido resident decides to play the long game and just make minimum payments. Technically speaking, that could result in the balance being paid in full, but it would definitely take a much longer time. However, as a recent article noted, the balance that is left unpaid each month continues to accrue interest.
When Escondido residents find themselves facing the oftentimes confusing conundrum of what to do about outstanding credit card debt, it can help to consider all options. For some, a realistic repayment plan can be crafted. But, for others, it may be more practical to consider the benefits of filing for bankruptcy.
Source: USA Today, "Credit card minimums: Perfectly calibrated to keep you in debt," Claire Tsosie, Nov. 15, 2016