Making Only Minimum Monthly Credit Card Payments Could Mean Paying Double For Everything

This chart, via OnMyOwnTwoFeet, shows the incredible costs if you incur $5,000 in credit card debt and only make the monthly minimum payments. By the time the debt is paid off, you’ll have effectively paid double the original debt.

This is why it’s 1) really good to pay your credit off in full every month and 2) if you can’t do that, pay as much as possible, and definitely more than the minimum monthly payment. These payments are purposely set low to keep you in debt as long as the credit card company can. It’s called the profit motive, and it’s not just for corporations, you should apply it to your personal finances as well.


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  1. miborovsky says:

    Anyone who doesn’t pay the full balance every month needs either a personal finance crash course, or a bullet to the head.

  2. CreativeLinks says:

    Credit Card companies are simply evil and must be stopped.

    Do you realize that it is probably cheaper to borrow money from a street Loan Shark then from a CC Company?

  3. misterfancypants says:

    While I agree that paying off your full balance is the best idea, sometimes emergency circumstances mitigate, and it’s necessary (though not profitable) to get a quick loan from your credit card. After all, credit cards are sometimes used for things like doctor bills and not just ginormous tvs, etc. In such a case, it’s best to pay off as much you can as soon as you possibly can, as Ben suggests.

  4. Charles Duffy says:

    @CreativeLinks: Probably, but credit card companies and payday loan centers have an advantage in that loan sharks don’t advertise as effectively.

    I certainly don’t know where to go looking for one.

  5. sliceofbread says:

    It’s sad that people don’t think of credit cards the way they should be:

    You are borrowing money for FREE if you pay it back as you promise to. If you get the right card, you actually make money, so I’m not all too surprised (nor offended) that you could pay double over…. 34 years? Yes, 34 years is what I see. Just don’t spend money you don’t have.

  6. miborovsky says:

    @misterfancypants: I’m pretty darn sure there are better places to take out a loan than with a credit card that charges 20% interest! Like… a bank.

  7. Beerad says:

    @miborovsky: True, but I don’t know how feasible it is to tell the hospital “Uh, why don’t you hold off on that emergency treatment while I run to the bank and do some lengthy paperwork.” Besides which, what if you don’t get approved? In any case I’m not sure anyone deserves an execution style murder for their less-than-ideal financial habits as you initially suggest.

  8. jeffj-nj says:

    In the case of your hypothetical, highly improbable, situtation, why not just charge whatever you have to when you have to and then go get a loan from the bank which you’ll use to pay off the bill in full when it shows up in a few weeks? It takes minutes to fill out a form, and hours to get approved (well, assuming you’re someone who has made a habit of paying bills on time in the past, of course, so I suppose YMMV).

    My second comment is not intended for you, so even if should happen to seem that way, remember that I actually came in here to say it prior to having read your post.

    People are really freaking dumb about credit cards, and one day, I hope to know why.

  9. B says:

    @miborovsky: A bank isn’t going to give you a better interest rate for a unsecured loan than a credit card will.

  10. misterfancypants says:

    That’s an option I hadn’t thought of. Though many credit cards don’t charge the 20% that miborovsky cites (it’s often more like 7-10%… as long as you pay on time etc. etc.), I could imagine a bank loan being cheaper. My guess, though, is that the average consumer is under-informed when it comes to bank loans. And if loans are indeed a viable alternative to credit card use, maybe the consumerist could do a post on it?

  11. What are some ways you guys pay off debt? I am one of those poor souls that this article specifically refers to and I am looking to change that. I have about $5,000 in credit card debt, (honeymoon, tuition for wife, etc.) and I pay the minimums because that’s what I CAN DO, but what are some ways I can pay MORE than the minimum so I’m not paying double down the road?

  12. Narockstar says:

    I dug myself into some scary credit card debt being unemployed and underemployed for several years. I wasn’t able to do much about it being only able to pay minimum or a little more. I’ve finally started to make progress after transferring the total balance to a 3.9% deal. I’ve paid off about $3000 in the past year and a half. If you can get a deal like that, you can pay off so much more principle compared to interest without paying a lot more each month.

  13. bonzombiekitty says:

    @They Call Me Dan:

    If all you can afford is to make minimum payments, then you need to cut back on other expenses. Experience tells me that most people have a good amount of luxury expenses that they really don’t need. Get rid of those expenses and use it to pay off your bills. If you have debt on multiple cards, pay off the smallest one and then when that’s paid off, use that monthly payment amount in paying off the next biggest one and so on.

    Failing that, you may be able to get another credit card that will give you 0% APR on balance transfers. They’ll probably charge you a certain percentage of the balance, but it should be less than the amount of money you’d spend paying it off the other way.