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 By far the most common practice when it comes to paying off credit cards, making minimum payments is also the most costly.
Few ever really take the time to calculate how much their debt will cost them if the continue to make just their minimum payments. If they did, they may be surprised.
Example 1:
Let's look at "Bob" who has a fairly typical case of $25,000 in card debt at an 18% interest.
We will assume Bob's minimum payments are calculated at 2.5% of his debt, which is average.(This is normally anywhere between 2 and 3%) So on $25,000 of credit card debt, his Minimimum Payment is $625/month.
"Bob" makes his minimum payments every month.
"Bob" will be debt free in 39.42 years at a total cost of $62,115.16!
Want to play around with your own numbers? Here's the debt calculator I used to get these numbers.
Example 2: Let's say "Bob" missed a payment, and his interest rate went to 29%
Total Debt- $25,000
Interest Rate- 29%
Minimum Payment- 2.5% of the debt.
The only thing we're changing from Example 1 to Example 2 is the interest rate. With a 29% interest rate, "Bob" will not live long enough to get out of debt.
If he lived long enough it would take Bob 425.42 Years to get out of debt, and his total cost would be $739,710.58!
Can you see why Einstein said, "Compounding is the most pwerful force in the universe." ?
The lesson to be learned here, is that when you only make your minimum payments, the banks are winning. If you have debt and you are only making your minimum payments, you need to make a change!
If you're not sure what change that is, take the Free Debt Exam. If you answer the questions honestly, the exam will tell you what options you should look at, and which is better for your specific situation. | 
