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Credit Card Debt Help 2
In this credit card example we only
consider a few factors in determining the total cost of
credit card debt. We are making an assumption that Tom
will no longer use his credit cards and that all payments
will be made in full and on time.
We all know that this is not always
possible. Any number of factors in our personal lives
can cause us to make a late payment or send less than
the minimum amount.
Tom has a current outstanding balance
of $8,000 on various credit cards, each month he pays
the minimum amount of 2.5% of his outstanding balance.
His average interest rate on all credit cards is 20%.
Tom has stopped using his credit cards and does not plan
on adding any new charges.
As you can see in the chart below, when
Tom pays his credit card debt on his own (at 20% interest),
he will pay back a total of $27,931 (Outstanding Balance
$8,000 + Interest Charges $19,931) and it will take him
an estimated 30 years and 3 months to pay-off.
We are sure you are astonished at these
figures, but we assure you they are accurate. Let us explain
why. Unlike a conventional loan, most credit card companies
do not set a fixed dollar amount due each month. Instead,
they will determine a percentage of the outstanding balance.
This means that if you owe $8,000 and your minimum monthly
payment is 2.5% of your outstanding debt, your monthly
payment would be set at $200 ($8,000 x 2.5%). As you pay
down your total outstanding debt, your minimum payment
will decrease. Complete our free no obligation application
now!
This means that after a few years
when your outstanding balance finally decreases to $4,000,
your minimum monthly payment of 2.5% would now be $100
($4,000 x 2.5%). The credit card company is not doing
you a favor, they are dramatically increasing the amount
of interest you will pay as well as the number of years
it will take to pay off.
| Paying your
debt - on your own |
Current balance: $8,000
Monthly payment: 2.5% of outstanding
balance |
| Interest rate |
Interest paid |
Length of time |
| 24% |
$36,512 |
48 yrs. 9 mo. |
| 20% |
$19,931 |
30 yrs. 3 mo. |
| 18% |
$15,432 |
25 yrs. 7 mo. |
| 15% |
$10,612 |
20 yrs. 10 mo. |
| 12% |
$7,314 |
17 yrs. 8 mo. |
If Tom was to pay off his credit
card debt through The Credit Network, he would save thousands
of dollars and many years. Using the same debt of $8,000,
but with a fixed monthly payment of 2.5% of the original
debt ($200), you can see the dramatic decrease in interest
charges and number of years in the chart below.
The Credit Network offers these benefits
through a combination of lower interest rates, fixed monthly
payments that fit your budget, re-aging your account to
a current status, and stopping over the limit charges
and late payment fees.
Why should you pay $7,000 - $37,000
in interest and spend 18 - 49 years doing it, when The
Credit Network can help you pay your debt in as little
as 3-5 years and save you $6,000 - $34,000 in interest
charges.
| Paying your
debt - through The Credit Network |
Current balance: $20,000
Monthly payment: 2.5% of outstanding
balance |
| Interest rate |
Interest paid |
Length of time |
| 15% |
$2,982 |
4 yrs. 7 mo. |
| 12% |
$2,135 |
4 yrs. 1 mo. |
| 10% |
$1,672 |
4 yrs. 11 mo. |
| 8% |
$1,263 |
3 yrs. 11 mo. |
| 4% |
$589 |
3 yrs. 7 mo. |
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