How long will it take you to pay off your credit cards?
Remember, it’s mathematically impossible to pay off your credit cards if you have an interest rate that is in excess of 24% and only making the minimum payments. Most individuals don’t understand that the interest rate and the actual payment are mutually exclusive of one another. In other words, one has nothing to do with the other. Creditors typically set your payment at 1%, 2%, or 3% of the total balance. In a situation where your interest rate is in excess of 24%, and your payments have been set at only 2%, your payments will not cover the interest being generated on your card each month. It’s called negative amortization. What’s worse is that by the time you’re done paying off most debts in excess of 20%, you’ll have paid 6-8 times what you currently owe due to compounding interest and usage fees.
