My Great Grand Kids Will Be Paying Off My Credit Cards
It’s been a few months since I’ve written anything about money. I wish I could tell that it was because we struck gold and have been busy on a first class tour of the world. Unfortunately, it’s because we’ve been busy working hard and trying to keep up with the big changes that are about to take place in our lives. We’ve not done a very good job at tracking our money recently which without a doubt means we’ve been spending more than we should. We plan on catching up on all of earning and spending tracking really soon, and getting back on track with some of our goals that we have lost site of.
In the mean time, I thought I would share a little credit card story with you.
In recent months a law was passed to keep credit card companies in line. One of the clauses of this law requires credit card companies to include some new, and eye opening, information on your credit card bill each month.
Have you noticed this new information?
Go ahead, and find a recent bill and take a look at it. I’ll be waiting here with an ammonia stick to bring you back around after you pass out from the shock.
Did you find it?
This new law requires credit card bills to state how long it will take you to pay off your credit card if you only make the minimum payment and do not purchase anything else. Your credit card bill must also state how much money you will end up paying in interest over the millions of years it’s going to take for you to pay it off.
In case you are too afraid to look at your own credit card bill, I will let you know what mine had to say.
Statement Due Date 04/04/2010 (This was an old bill, so don’t panic)
Current Balance $5, 388.21
Minimum Payment $124.00
Interest Charged for this period $120.77
How insane is that?? Less than $4.00 of my minimum payment goes to paying off the balance, the rest goes to interest. I have an interest rate of roughly 25%. It would take me forever to calculate the weighted whatever of the interest rate of my purchases and cash advances.
It gets better, or worse, depending on your perspective.
If I pay only the minimum payment it will take me 221 years to pay off this poisonous thing. In 221 years this stupid credit card company probably won’t even exist. Credit cards as we know it probably won’t even exist in 221 years. My great grand kinds would have to pay off my credit cards if I only made the minimum payments.
If I only pay the minimum payments over the next 221 years, I will have paid $142,320.00 in interest.
Did your jaw just hit the ground? Mine did.
The credit card company also includes some good news. Here is the good news (if you can call it good news), if I pay $216.00 a month towards the card, it will be paid off in three years. I will pay $7,770.00. That’s a savings of $134, 550.00!
Three years isn’t fast enough for me. My goal (our goal I should say) is to have this thing paid off by the end of the year. We pay at least three times the minimum payment, and most of the time we pay more than that.
Back on January 1, 2010 the balance was $5,910.01. Today the balance is $4,033.15. That’s a pretty good junk we’ve taken out so far, but if we were on schedule it should be all the way down to $2,955.00. We’re $1,078.15 behind. I could make excuses all day for our stunted debt pay down, but I’m not going to waste your time with that baloney. Fear not, we have a plan. It’s going to involve a few stunts and moving money around, but it’s going to be totally worth it.
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Thank you so much for sharing the details of your statement. I think many people know that making the minimum payment means it will take significantly longer–and cost significantly more–than making a greater payment, but the fact that the minimum payments frequently do not cover much more than the interest is probably going to wake more people up. While I opposed the new credit card regulations in that banks were given months to implement them–and months to raise interest rates willy-nilly and have one last chance to take advantage of the consumer–I’m pleased to see that the information the credit card companies have to provide is truly benefitting the consumer.
And I wouldn’t beat yourself up over not being “on schedule” getting your balance where you want it. Life happens…sometimes you can only do so much. The fact that you have a goal and are working towards it is fabulous and something to be proud of…not something to be sad about because it isn’t going “perfectly.” Congrats on all the great progress you have made!!!!
We had a few credit cards hike our interest rate, add annual fees and cut our limits prior to the credit card reform going into effect. Infuriating!
Life does happen. That’s for sure. We’ve had a few major things come up in life since we started our debt pay down blitz, so we’re taking it in stride. Every time we look at how much money is going to paying for our past, we get pumped up to pay down more!
WOW!!! what an eye opener, panic is setting in…got to get to work on this one. Thanks for the advice.
Take it one day at a time.
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Thank you for posting this. I always appreciate when people are honest about money (the last cultural taboo).
About 5 years ago I was in credit card debt up to my eyeballs (over $20K) and nothing, NOTHING, made me feel more proud of myself than the day I paid the last one off. Keep up your good work–it will be so worth it when you are done.
Congratulations! What a wonderful feeling that must have been.
Yikes! I don’t get how they can charge such an enormous interest rate. That’s what gets me all the time — those ridiculous rates they slam you with.
My neighbor called and said the mailman had accidentally put our Discover Card statement in her mailbox and she had mistakenly opened it, since she also has the same card. She left it in her mailslot if we wanted to come over and pick it up.
I told her to throw it away. Truthfully, we keep track of our payments online so I don’t often look at the statement anyways, but I was really trying to avoid seeing that new info. It’s going to take us at LEAST a couple of years to pay off the card, even if we don’t add any more to it and make double the minimum payments. I hate that credit card – all credit cards – and cannot wait for the day when I can cut them all up and pay cash forever.
To be honest, we do our bills online, so I frequently don’t open the paper statements. But, woah buddy, when I opened that card, I nearly puked. If you pay your bills online, Discover likely lists the same information in digital form.
I can’t wait for the day that our cards are paid off.
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You go kiddo! I hate the darn things. Everyone’s life would be much better off without them.I would really like to get rid of all of my credit accounts and no longer be at the mercy of the cresit system!!!! PERIOD!!!!!
Here’s how they work in my house…I pay ‘em and my husband runs them up. He’s way ahead of me so I’ve lost all hope of being debt free. That said, they are a blessing to have in emergencies. Unfortunately, too many people think “I want it and I want it now” IS an emergency!
We had a shock a few months back when our cc issuer informed (by mail) us they would be raising our low, reasonable rate to almost double in less than two billing cycles. Never late, always paying ahead by hundreds of dollars – literally. No reason given, other than they can raise it when they want. We called our credit union to see what they could offer. How’s a no-charge balance transfer and a lower rate (than before) until this balance ($12,000+) is paid off? Here’s the kicker, when we called to get a pay-off, the cc issuer said “We weren’t really going to raise your rate, in fact, we were going to offer you 12 months at 0%. Are you sure you want to do a balance transfer?” YES. I’d rather my credit union make a little money off of me than that screwed up company. We wouldn’t be in this position if we had been diligent, but well, here we are and trying to make the best of it.
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Excellent post, every one should read it! Especially folks starting out in life or newlyweds! We fought the CC grind for years. Finally killed it!
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