The Minimum Payment Debt Trap

by DeLadurantey Law Office, LLC on November 2, 2009

The Minimum Payment Debt Trap

When used properly, the credit card can be an extremely useful tool. It allows you to buy items immediately and delay payment by a few weeks, or a few months if necessary. Some credit card purchases offer a zero percent financing offer over a 6 or 12 month period, or even longer. When you budget appropriately and plan your expenses, you can take advantage of the benefits of credit cards while never having to suffer the significant costs. If you treat your credit card as free money or as a necessary meal ticket, however, you may quickly find yourself mired in debt.

When you receive your credit card bill in the mail each month, you should be able to pay it in full. This is a good sign that your spending is under control and that you are living within your means. As soon as your balance begins to balloon beyond your means and your debt increases, you are heading for financial trouble.

Many people make the mistake of using the minimum payment due as a measure of living within their means; they believe that if they can pay the minimum payment, they must be on track financially. This is a common misconception, and the credit card companies make no effort to inform you otherwise. After all, when you make only the minimum payment you maximize your creditor’s profits by paying heaps of money in interest!

A minimum payment is actually just a fraction of what you should be paying if you want to avoid long term debt. On your bill, printed in small black font, your minimum payment due looks fairly harmless. However, your bill doesn’t include any disclaimers about the long-term fallout of only making minimum payments.

If you had a balance of $1,500 on your credit card and only ever made the minimum payment at 2 percent, with no other purchases made, it could take you over 19 years to pay off your balance. Obviously creditors aren’t interested in providing this information, because the longer you pay the minimum payment, the more they make in the long run. With just the minimum payment you will end up paying almost double of what you originally owed in interest alone.

Contact Us

Don’t allow yourself to fall into the minimum payment debt trap. If you are having trouble paying down your debt or are being threatened with repossession or foreclosure, please contact the experienced Milwaukee debt negotiation attorneys at the DeLadurantey Law Office, LLC today at 414-377-0518.

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