http://masteryourcard.com/blog/2008/05/12/why-paying-the-minimum-due-is-a-bad-idea/ The best Credit Card Debt Blog online Wed, 17 Mar 2010 10:38:55 -0400 http://wordpress.org/?v=abc hourly 1 http://masteryourcard.com/blog/2008/05/12/why-paying-the-minimum-due-is-a-bad-idea/comment-page-1/#comment-1942 Jaime Davilis Mon, 12 May 2008 15:35:20 +0000 http://masteryourcard.com/blog/2008/05/12/why-paying-the-minimum-due-is-a-bad-idea/#comment-1942 Yeah MYC, I think it is psychological. The word "minimum" sounds innocuous; small, easy, safe, etc. When you see that word on your credit card statement, you feel good about paying that vs. your mortgage/rent, groceries, utility bills, etc. I think most people know that they will stay in debt for a long time making minimum payments, but it doesn't feel bad because of the psychological feel of the word "minimum". That is my guess anyway. Most people don't know how to calculate interest. On a 1000 balance at 18%, that's 1.5% for a month or 15$ in interest. Then your minimum payment is 20$, and you only pay 5$ towards interest, which means you won't pay off the balance for nearly 200 months! (not quite 10 billion years, but still a long time! :) Yeah MYC, I think it is psychological. The word “minimum” sounds innocuous; small, easy, safe, etc. When you see that word on your credit card statement, you feel good about paying that vs. your mortgage/rent, groceries, utility bills, etc. I think most people know that they will stay in debt for a long time making minimum payments, but it doesn’t feel bad because of the psychological feel of the word “minimum”. That is my guess anyway. Most people don’t know how to calculate interest. On a 1000 balance at 18%, that’s 1.5% for a month or 15$ in interest. Then your minimum payment is 20$, and you only pay 5$ towards interest, which means you won’t pay off the balance for nearly 200 months! (not quite 10 billion years, but still a long time! :)

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