Finance Quick Answers
Is it important to pay more than the minimum amount due on my credit card balance?
Credit card lenders would prefer you not worry about how much debt will cost or how long it takes to repay. They want you to think about "minimum monthly payments" to keep your account current.
Paying off balances with the minimum now takes longer
than ever because credit companies have downsized
monthly minimum payments from between 3% to 5% to
between 1.5% and 2% currently. Thus a credit card
balance of $3000 with a 15% annual rate would take over
12 years to repay with a $45 minimum payment, and it
would cost a whopping $3,481 in total interest payments.
Source: Understanding what credit costs. (1999, July). Consumer Reports, 14.
Sandra McKinnon, Consumer & Family Economics Specialist, University of Missouri Extension
Cynthia E. Crawford, Ph.D., Consumer & Family Economics Specialist, University of Missouri Extension
Last update: Sunday, July 27, 2008