{"id":371,"date":"2021-09-22T09:48:32","date_gmt":"2021-09-22T09:48:32","guid":{"rendered":"https:\/\/tfolifeacademy.com\/tfowealth\/?post_type=read_it&#038;p=371"},"modified":"2023-08-24T10:08:56","modified_gmt":"2023-08-24T10:08:56","slug":"the-lure-of-credit-cards-the-minimum-payment-trap","status":"publish","type":"read_it","link":"https:\/\/tfolifeacademy.com\/tfowealth\/readit\/the-lure-of-credit-cards-the-minimum-payment-trap\/","title":{"rendered":"The Lure of Credit Cards \u2013 The Minimum Payment Trap"},"content":{"rendered":"<section class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][vc_column_text]One primary factor contributing to the savings problem in America is the continued reliance on credit cards to purchase things one wants but does not necessarily need. The mounting debt Americans pile on is alarming:<\/p>\n<ul>\n<li>13% of Americans expect to be in debt the rest of their lives<sup>1<\/sup><\/li>\n<li>The average credit card debt is $5,400<sup>1<\/sup><\/li>\n<li>Of this debt, 52% go towards paying for basic necessities<\/li>\n<li>The average student debt held is $24,155<sup>1<\/sup><\/li>\n<li>Of these, 66% said they would have changed their decision taking student loans<sup>1<\/sup><\/li>\n<\/ul>\n<p>Some individuals may be easily lured into paying only the minimum balance due on their monthly credit card bill. Perhaps they feel it gives them more spending power. However, this merely creates short-term relief, often creating even more debt. The following chart shows the effects of making a $20 minimum monthly payment on a credit card debt of $1,000 with a 17.9% annual finance charge over the course of one year.<\/p>\n<p><strong><u>Month<\/u><\/strong><strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<u>Payment<\/u>\u00a0\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<u>Balance<\/u><\/strong><\/p>\n<p>January\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $994.92<\/p>\n<p>February\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $989.76<\/p>\n<p>March\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0$20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $984.52<\/p>\n<p>April\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $979.21<\/p>\n<p>May\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0$20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $973.81<\/p>\n<p>June\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $968.34<\/p>\n<p>July\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0$20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $962.78<\/p>\n<p>August\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $957.15<\/p>\n<p>September\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0$20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $951.42<\/p>\n<p>October\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $945.62<\/p>\n<p>November\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $939.72<\/p>\n<p>December\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $20\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $933.74<\/p>\n<p><strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Total\u00a0 Payments\u00a0 \u00a0vs.\u00a0 \u00a0Reduction in Debt<\/strong><\/p>\n<p><strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 $240\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0$66.26<\/strong><\/p>\n<p>As you can see, by making the minimum payment each month, you are barely making a dent in the overall principal because of the accumulating interest going against your outstanding debt. Through this example, it would take Jake 93 months (or nearly 8 years) to pay off his $1,000 credit card bill. In doing so, he would pay $850 just in interest, 85% more than his original debt.<\/p>\n<p>What can this teach students and young adults?\u00a0 To look at debt not in terms of what it enables you to buy, but instead what it will cost you over time, both in principal and interest.<\/p>\n<p>88WP &#8211; 2023.08[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n<\/section>","protected":false},"excerpt":{"rendered":"<p>One primary factor contributing to the savings problem in America is the continued reliance on credit cards to purchase things one wants but does not necessarily need. Here is an example of the long-term impact of falling into the minimum payment trap.<\/p>\n","protected":false},"featured_media":372,"template":"","read_it_category":[17],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Lure of Credit Cards \u2013 The Minimum Payment Trap - TFO Life Academy<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tfolifeacademy.com\/tfowealth\/readit\/the-lure-of-credit-cards-the-minimum-payment-trap\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Lure of Credit Cards \u2013 The Minimum Payment Trap - TFO Life Academy\" \/>\n<meta property=\"og:description\" content=\"One primary factor contributing to the savings problem in America is the continued reliance on credit cards to purchase things one wants but does not necessarily need. 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