Anyone who makes the minimum payment on their credit card bill is just plain stupid. And there are millions of these stupid people wandering around the malls of America, financing their Popeye’s Chicken lunch. It will take a moron 30 years to payoff a lousy $2,000 balance if they make the minimum payment. And this is a best case scenario. The average American is rolling a $10,700 balance on their credit card. They will be dead before they ever pay it off. These are the same people leasing new cars every three years based upon the lowest payment they can afford. These people glory in their financial stupidity.
Guest Post by Quentin Fottrell
How long does it take to pay a $2,000 credit card debt with minimum payments?
It takes less time to have a child and raise them to adulthood
Getty Images
When it comes to your financial health, minimum payments on your credit cards are poison.
A $2,000 credit balance with an 18% annual rate, with a minimum payment of 2% of the balance, or $10, whichever is greater, would take 370 months or just over 30 years to pay off.
Making minimum payments on your credit card is a treadmill to nowhere,” says Greg McBride, chief financial analyst at the personal finance website Bankrate.com. During that time, you would end up paying more $4,931 in interest and charges, 146% more than the original balance on the card, according to an online calculator on credit-card comparison site, CreditCards.com.
Most people are unable to make these calculations themselves. When given a similar calculation on how long it would take to pay off a credit card with just minimum payments, only 2% of people were able to answer correctly, according to the survey by TotallyMoney.com, a U.K.-based personal finance website. They also underestimate the amount of interest they’d have to pay off: Only 4% were able to give the correct amount of interest. What’s more, one-third of respondents thought they would actually be able to avoid paying interest by making the minimum monthly payment.
There’s also a broader impact. Around 30% of the FICO credit score is based on how much people owe on their accounts. “Owing money on credit accounts doesn’t necessarily mean you’re a high-risk borrower with a low FICO Score,” according to FICO. “However, when a high percentage of a person’s available credit is been used, this can indicate that a person is overextended, and is more likely to make late or missed payments.” In some cases, showing a very small balance and never missing a payment shows a person is good at managing cards and may be better than carrying no balance at all.
It pays to manage credit cards carefully. And paying off credit cards on a large number of accounts with outstanding balances may also be damaging to your credit score and indicate higher risk of over-extension,” FICO says. “Someone who is close to maxing out several credit cards has a high credit utilization ratio and may have trouble making payments in the future.”
This simple but attention-getting presentation should be mandatory in middle school, junior high, first form, call it whatever you want. No one should be able to graduate from high school unable to make those calculations. My grandfather was a banker and he made sure that by age twelve I understood and could calculate (pre-electronic-calculator) a mortgage; credit cards hadn’t appeared yet.
This is what should be taught in schools, along with contract-reading, a second language, basic mechanics, geography, grammar and spelling, you get the idea. Back to basics and at least a rudimentary financial education. Those unable to master these are doomed to the underclass, human cattle to be herded and driven by the hirelings of their owners. Tragically, many of the most intelligent are also among the most rapacious and compassionless individuals around, so they will see to it that public “education” at the very least will ensure that schools remain feedlots for the ignorant and the even-more-unfortunate innately stupid, the “unteachables” who can be indoctrinated but not instructed, entertained but not educated and at the end are told that they are the “equals” of those who will have to see to their well-being when their well-being would better be served by recognizing differences and hoping for better treatment by their “betters”.
And perhaps if I wish upon a star, this will come about.
Stocks made a low today.
Digest that, please.
They made a low. NOW comes the key question: Will the major averages rally to break above their 13 & 26 day moving averages (EMA’s) on a daily basis?
Or will they rally just to fill the gap left from a week ago Monday’s open, and then Mr. Market begins his first base jump….of many?
I don’t know yet. But I’m guessing the latter.
The technicals will tell their story as this rally (if it continues) plays out. It’s most probable that the next 1-2 days will be overall “up,” but if the rally gets choppy and the technicals overbought near the closing level of Friday 6/26, it could become VERY interesting……………………………..
What should be taught to teens (and any adults who never got the world) that there are great benefits to using other people’s money for 30 days.
Find a credit card underwriter (i.e. bank) that offers cash back rewards in the maximum amount (Capital redeems cash back of 2% on all purchases). Then use the credit card to purchase everything you need, guaranteeing a 2% discount on everything you buy.
Then pay off the card balance two days before it is due – in FULL, EVERY MONTH.
Two advantages, you get 2% discount, you use their money for a month and at the end of each month you receive a printed summary of every dime you’ve spent over the whole month that can be broken easily down into meds, groceries, gas, etc…. Should the time come when you have to make some cuts, you can easily determine where the cuts can be made with minimum pain.
The first month you fail to PAY OFF THE CARD IN FULL, take a pair of scissors and cut up the card. Don’t get another one until you are sure you can pay it off in full on a monthly basis.
This way, the banks make their money from vendors, not you, the customer, you get a discount on whatever you buy and use the banks money for 30 days. There is no downside to it unless you break the “pay off in 30 days rule”, in which case you don’t deserve a credit card in the first part.
MA
Yet more proof that EVERY dime every stolen from my ancestors, and myself, to pay for public education has been squandered, wasted and lost.
“…Most people are unable to make these calculations themselves. When given a similar calculation on how long it would take to pay off a credit card with just minimum payments, only 2% of people were able to answer correctly, according to the survey by TotallyMoney.com, a U.K.-based personal finance website. They also underestimate the amount of interest they’d have to pay off: Only 4% were able to give the correct amount of interest. What’s more, one-third of respondents thought they would actually be able to avoid paying interest by making the minimum monthly payment….”
TWO percent? How much do we pay to get a kid through 13 years of primary school? It is fucking CRIMINAL how stupid we are.
We have paid legions of “experts” to get us to this stunning outcome.
And yet, we trust other “experts” from the SAME dens of iniquity (academia) when it comes to forcing chemicals into our bloodstreams, our infants, our very food supply.
We are on a date with destiny and it isn’t God’s “wrath” we are facing.
Our years of putting man above nature, “science” (and profits) above reality and the laws of nature, hubris and spitting in God’s eye, will catch up with us.
Sooner than later. Most will either blame “others” or “God,” but I know the truth.
WE, ME, have done this. Allowed this, continue this.
We will so get what we deserve and created. The sad part is those of us that have been kicking and screaming the entire time will get the same helping.
Cripes, no wonder I keep going back into exile. We are so fucked, even hanging around with others that know it isn’t much of a relief anymore.
I prefer:
When it comes to your financial health, credit cards are poison.
The End.