This is an article that I read a couple years ago. What’s interesting is that the numbers they point out are actually worse now. I noticed that they had the savings rate at about 2% in 2004. Now it’s a negative number. I believe that people’s debt load might have increased too. Anyway, check out the article. It’s great!!
http://www.csmonitor.com/2004/0816/p14s01-wmgn.html
Here’s a paragraph from the article:
“Those who get by just paying the minimum monthly charge may not have noticed that the typical minimum has been lowered in recent years from 5 percent to just 2 or 3 percent, according to De-mos, a research and advocacy group in New York. With an interest rate of 15 percent, it calculates that it would take 32 years to pay off $5,000 by making only 2 percent minimum payments. It also warns about bigger late fees: Revenue to credit-card companies from late fees jumped from $1.7 billion in 1996 to $7.3 billion in 2001.”
32 YEARS to pay off $5k. I bet none of the people making these minimum payments realize how long they’ll be paying that off. Imagine how much more money they’d have if they had just paid cash for the things they bought.
HAH this one is funny but sad..
He recalls one student who signed up for two cards in a week just because the vendors were offering free cookies.
I did not know CC companies were lowering their minimums so much. If someone wants to send more than the minimum they need to take a strategy into consideration first. If they only have one CC then paying over the minimum could be a no brainer depending on their overall situaiton. If a person has more than one card though they should focus on paying off one card at a time instead of spreading out the extra payments over several cards. This way you can focus your efforts and start taking one card down after another.
You can get our of debt, improve your credit and get your in right financial track by being an educated borrower, spender and consumer
Be sure about the borrower you go with, many will lie or at least twist the truth.
The numbers are atrocious! There is seriously going to be a reckoning soon and the writing is on the wall. It is a sad state things are in, especially since a little planning and discipline could avoid so much hardship.. oh well, thanks for the post!