Escape the Minimum Payment Trap

NEWS FLASH… credit card companies don’t want you to pay off your cards.


Because if you did, they’d stop making money off of you. If EVERYONE woke up one day and decided to pay off all their cards, then credit card companies would go out of business.

So, it is in the credit card company’s best interest to keep you enslaved to your debt as long as possible, forever if they can manage it.  And how do they enslave you?

With the minimum payment trap, that’s how.

By printing a “minimum” payment on your bill, they are sending you the subliminal message that that’s all you have to pay to stay “current”. But, they’ve done their homework. They know just how low they can make their minimum payment requirements to keep you below your limit and in debt indefinitely.

They even tell you in black and white that if you make only the minimum payments, you’re going to be shelling out your hard earned cash to them for years and years. Take a look at this taken right from one of our client’s credit card statements:

Minimum Payment Trap

This card had a balance of $8,312 and an APR of 15.74%. If the client paid only the minimum payment of $204 per month it would take her 17 years to pay off the balance and cost her an extra $6,649 in interest. (see arrow 2)

But, by adding just $22.50 a week to her payment, she could have it paid off 14 years sooner and save close to 7 Grand in interest!

Keep in mind, though, that these numbers work only of she does not charge anything more onto the card (see arrow 1). Or, if she does, she must pay that amount in addition to the 3-year payoff amount.

Bottom line: making only minimum payments is a BAD IDEA. Even if you can only swing an extra $20 or $30 a month, it’s worth it in the long run.

Here are a few tips to help you get started on your escape from the minimum payment trap:

  1. Pay your credit card on time every month. Late fees just make it take longer for you to be free.
  2. Pay your credit card weekly. It’s often easier to come up with an extra $20 a week than $80 once a month, even though it totals up to the same amount. For example, if your minimum payment is $125 and your goal payment is $200, pay your card $50 a week. Set it as a reminder in your phone’s calendar as an appointment so you don’t forget.
  3. If you have more than one card you want to pay off, start with the one with the lowest balance first. Add all the extra you can until it is gone, then start attacking the card with the next highest balance. This is called the “debt snowball”. Read more about it here.


If you have any questions, please give us a call at 770-952-5168 or contact us online.

“Like” us on Facebook to have great tips and breaking credit news delivered right to your phone or computer.

Other articles that may interest you:
3 Instant Credit Score Fixes
Keeping the Wolves at Bay – Safely Communicating With Debt Collectors
Six Places to NEVER Use Your Debit Card

This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.

Related Posts

Comments are closed.