Paying the Minimum Payment Leads to Maximum Debt for Atlanta Credit Users
You don't have to believe everything that you read on your credit card statement.
No, I'm not talking about accuracy (I'm assuming the information your creditor reports is correct -though if you never read your statement, how do you really know?). I'm actually referring to a new statement feature, courtesy of the Credit Card Accountability Responsibility and Disclosure Act (otherwise known as the Credit CARD Act). According to the law, your credit card company must provide you with a number that estimates just how long it will take you to pay off your debt if you only make the minimum payment each month. For many of us, that could be decades.
Now, if you really do intend to make minimum payments for the rest of your life, then I guess you can accept your estimate. But if you don't want it to become reality, don't believe it. Instead, believe that you have the power to change that number - and your debt problems.
I know that credit card debt can be overwhelming. Since you figure you'll be paying off that debt for the rest of your life, you might as well make it easy on yourself and keep the payments as small as possible, right? Not exactly. Though making the minimum might make it easier to keep on top of your other bills, it will eventually catch up with you. Since minimum payments cover little more - or only - interest, you'll never pay down your principal balance. That means your debt will continue to grow, and the amount of interest you owe will grow with it.
But even though you might feel out of control, you don't have to be. Look at that number on your statement as the fork in the road. What you're seeing on paper is the path you'll take if you continue making minimum payments. All you have to do is take a different path.
Sometimes lowering debt is as easy as adopting a stricter budget so you can afford to pay down more of your balance. But if your debt is simply too large and overwhelming to handle alone, there's no shame in seeking help. In fact, bankruptcy can be one of the most effective ways to lower a large debt, since it offers a realistic plan and timeframe for making payments. Once you start paying more than the minimum, you'll erase years of payments off your financial life. Find out if there's a bankruptcy plan that's right for you today when you try a free personal debt analysis with an Atlanta bankruptcy attorney.