Is is true that if you only make minimum payment on most credit cards, it would take 30 years to pay it off?

Answer 1

Take the example:

If you have a $5,000 balance and your interest rate is 18% (i.e. approximately 1.5% per month) then you will be charged $75 per month in finance charges.

If your minimum payment is less than $75 then your balance will be increasing from month to month and you will NEVER pay your balance off.

If your minimum payment is $75 then your balance will stay at $5,000 and you will never pay it off.

If your minimum payment is $80 then your balance will decrease by $5 on the first month, a bit more than $5 in the second month and so will take approximately 700 months or about 50 years to be paid off.

So the bottom line is: it depends on (a) your initial balance, (b) your interest rate and (c) your minimum payment.

Answer 2

Take about a $3,000 balance. If you just paid the minimum payment (regardless of interest rate; that's factored in to the payment) it would take about that long to pay it off. However, with the new minimum payments that companies have adopted, it'll only take about 10-15 years. That's the idea behind the higher minimum payments (50%-100% higher). The government wants us all to get out of debt faster.

Answer 3

I don't know if it will take 30 years. Without knowing the details - principal amount, interest rate, minimum balance, monthly or annual fees, etc - it's impossible to calculate how long it will take. I do know that it usually takes years - maybe over 10 or 15 years - to pay it off at the minimum payment amount. And doing it this way means you'll pay bushels of money in interest fees.

Credit cards are a handy tool, but if you can only make your minimum payment, you can't afford to have one. Cut it up, shred it, burn it, but get rid of it. Put every single extra dime you have towards it, and pay it off.

Answer 4

The porblem with credit cards is that the minimum payment on credit card debt is calculated as a percentage of your current balance. The minimum payment drops as your balance is paid, but thanks to the magic of compounding, you'll end up paying for a long, long time.

Check this web site and you will know exactly how long it will take: http://www.bankrate.com/brm/calc/MinPayment.asp.

But basically, as long as you make the minimum, the compounding interest will make it almost worthless... that's why i ve heard too about the 30 years to payback!

I hope that the answer carify your situation, and that the website will let you have YOUR personal answer! ;)

Answer 5

Depending on how much credit you racked up, yes. For some people, they would never pay off their cards making minimum payments.

The credit card industry is a bad thing to get into if you are not responsible with it.

If you rack up a 10,000 on your card, and would generally not have that kind of cash to pay it off, you are probably getting in over your head.

Answer 6

It depends on what your credit limit was, what the minimum payment was, etc. I did a bunch of amortization tables in highschool and college and it tended to be closer to 20 years if you made a payment every month.

Answer 7

While I don't know if it would take 30 years, I know it would take an inordinate amount of time, because, the interest would compound over time and the bill would not get paid off on account of accumulating interest.

Answer 8

if I had a credit card with a balance of $2000.00 to be paid off with a monthly amount of $50.00 and finance charges totaling 17.25,
as long as I NEVER used it again...

I would be able to pay this off in 2 years and 5 months.

Answer 9

in many cases yes. definately you will pay 8-10 times the original price after interest

Answer 10

its all on how much debt u are in