Uncontrollable Credit Card Debt?
BEWARE THE DANGER OF CREDIT CARD DEBT! Borrow $5,750 at 21 and you could be 50 before it clears! That’s what happens if you just make minimum credit card payments – their evil genius can lock you in perpetual debt, boosting banks’ profits.
Eliminate High Interest Credit Card Debt and Become Free of Debt
Are your credit cards at the credit limit – or even over?
Can you only afford to pay the minimum monthly payment on your credit cards each month?
If you owe $20,000 on credit cards and only pay the minimum, it will take you more than 60 years to pay this off. Costing you tens of thousands in interest.
We can help.
Minimum repayments: Back to basics
Unlike mortgages and loans, with credit cards you choose what you repay. The more you pay, the faster the debt disappears.
You only have to pay the minimum repayment to keep your card – and keep the credit card company making a fortune from you.
This isn’t a fixed amount but is a percentage of the balance. So the amount you repay each month will fall as your balance reduces, meaning it takes longer to clear. The longer you borrow for, the more interest you’re charged because the “APR” means you’re charged that percentage of your outstanding debts EVERY year.
So, The Quicker You Repay, The Less It Costs.
It’s in the credit card company’s interest to set minimum payments low, keeping you trapped in debt for longer and repaying more to them.
By law, repayments must be at least 1% of the balance plus that month’s interest, any default charges and the annual fee.
Some card providers impose a minimum monetary value. It’s not unusual for a minimum payment on a card to be listed as:
“Greater of 1% of balance plus interest, 2.25% of balance or $10”.
You will always pay the one of these that’s the largest monetary value.
Why are they dangerous?
As a borrower, your aims are completely the opposite to that of credit card companies. You need to repay your debt as quickly and cheaply as possible, they want to keep you perpetually repaying your debt and earning them interest.
Minimum repayments are designed to do just that. Crucially, as the minimum is a percentage of your outstanding debt, then…
As your debt decreases, so does the amount you repay.
Minimum repayments must at least cover the interest, so your balance will fall each month. However, as the minimum repayment amount is based on your balance, then as it decreases, so will your repayments. This means your debts will last for longer than if you were to make fixed repayments each month.
Check your debt with the Credit Card Calculator
This special minimum repayment calculator reveals how long your card will take to repay if you just pay the minimum. All the info you need should be on your credit card statement.
Your easy three-step solution
There are two main reasons most people make just the minimum repayments. The first is because they simply don’t know how damaging it is. If that’s you, just increase the amount you repay immediately and the problem’s solved.
Yet many simply cannot afford to pay any more than the minimum. Crucially, you need to do a proper budget, which we can help you with here at Capital Debt Solutions. Yet even if you don’t, there are still some easy steps to help resolve the problem.
- Simple trick to beat the min repayment trap
There’s a remarkably easy and powerful solution to all this. The minimum repayment trap is based on the fact that the more debt you’ve repaid, the lower your repayments go.
So to stop that, simply make a fixed repayment based on what you can afford, rather than allowing the repayment to decrease each month.
- Reduce the interest you pay
If you’re paying a high rate of interest each month, your money is being eaten up by the card companies. If you paid less interest, you’d have more to throw at the balance.
You can minimise the interest by doing a balance transfer; this means you can shift debts to another card at hopefully a cheaper rate of interest.
You’ll need a good credit history to do this (ie, you haven’t been turned down for cards recently).
- Direct debit dilemma
Always set up a direct debit to automatically repay credit cards. This means you’ll never be fined for missing or making a late payment. Yet on direct debit forms, the minimum repayment option is often shown in large type as it’s by far the most profitable for lenders.
Instead, if you can, set your direct debit at a fixed amount.
If you really can’t guarantee repaying more than the minimum every month, don’t panic.
Just set up the minimum repayment by direct debit. But remember there’s nothing stopping you making other payments on top.
The real danger is getting into the mindset of thinking “I’m paying my bill” just because you’re repaying the minimum. Always try to pay more off whenever you can.
Your initial consultation with us here at Capital Debt Solutions is free.
- There is no charge for your initial consultation
Your debt solutions specialist will do three things:
- Confirm the size of your debts
- Agree a plan that works for you so that you can pay off your debts
- Protect you from more interest charges
During your free consultation, your debt solutions specialist will assist you with debt management options – and helps you clearly understand which are possible for you and which is the best choice.
We will help you to find the best solution and assist with you to get you back on track and rebuild your financial future.