If you continue to make only the minimum payment, calculated at interest 1% of the balance, at the decreasing monthly amount, the payoff time increases exponentially. If you just make those decreasing minimum payments for example, a ,000 debt at 15% interest will take just under 28 years to pay off and cost almost ,000 in interest. However, you may be able to cut that time dramatically.
Take a look at your credit card statement (or statements if you have multiple debts) where you’ll find the amount you’ll have to pay each month to pay off the debt in three years — and stick to that payment amount going forward. If you can pay that amount each month without taking on new debt, that figure can lay the groundwork for your payment plan.
You know (or hope) that at some point you’ll be able to pay it off. As you pay down your credit card debt, you may notice that as the balance gets smaller, so does the minimum payment listed on your statement.
Or are you haphazardly throwing money at it and hoping for the best?
If you have credit card debt, you probably are so over it. The payment plan you choose plays the biggest role in determining how long it takes you to get out of debt.
You want to pay off the debt, but it feels like a never-ending process. The first thing to realize is that there is a potential minimum payment trap.
When you obtain a debt consolidation loan, you pay off all of your outstanding credit cards with its proceeds.
This means that instead of owing money on multiple credit cards, you now have a single obligation.
But if that amount is too high, you may need to stretch out your debt a little longer or use other strategies listed here to try to get to that point.
Using this credit card payoff calculator, we looked at ,000 of credit card debt with a 15% interest rate.
Put them away, or freeze them into a bucket of ice, until you have completely paid off your outstanding balances.
Sorry to say, but getting out of debt requires taking those credit cards out of your wallet so you’re not tempted to use them.
Since the interest rate on a personal loan is often considerably lower than on a credit card, and the repayment term potentially much longer, the consolidated payment may be much lower, as you indicated.