Credit Card Companies are Sleazy But their Customers Get What They Ask For

Credit card companies are, and always have been, sleazy — though nowhere near as sleazy as health insurance companies (perhaps I’ll share my spittle-flecked manifesto on that subject at some future date).^*

Of course, it’s our own dang fault for running up our accounts and then wondering why we cannot get out from under all that crushing debt via faithfully making our minimum payments — all the while charging and charging until we exceed our credit limits, and our credit card companies start collecting even more fees.

However, the ethical conundrums of credit cards, personal responsibility, and blame and punishment aside, it is what it is and there’s not much left to do but to make a plan for paying off credit card debt.

Since the new credit card regulations have gone into effect, my credit card company web site now has a little calculator into which I enter my payment amount so that it can tell me how long it will take to pay off my balance and how much interest I will pay.

So, if I pay the minimum payment, here’s how it works out:

Balance as of last statement: $35,331.19
Minimum payment due: $762.00
Estimated payoff date: May 2053 (519 Months, or over 43 forking YEARS!)
Estimated total interest: $45,404
Estimated total cost: $80,735

Eeeeeeeeeeeeeeeeeeeeeeek!!!

OMG! WTF!

Okay, I’m gonna calm down now ’cause the handy dandy calculator reveals some powerful truths:

By upping my payments by just $238 per month (and either not using the card or implementing a pay/go system in which any new purchases are added to the regular monthly payment), substantial savings can be had:
Fixed Monthly Payment: $1000
Estimated Payoff Date: Nov 2013 (45 months)
Estimated Total Interest: $9025
Estimated Total Cost: $44,356

If I add just another $100 to that:
Fixed Monthly Payment: $1100
Estimated Payoff Date: Jun 2013 (40 months)
Estimated Total Interest: $7,967
Estimated Total Cost: $43,298

And if I up the payments to $1500
Fixed Monthly Payment: $1500
Estimated Payoff Date: Jun 2012 (28 months)
Estimated Total Interest: $5,455
Estimated Total Cost: $40,786

But what if I can only afford to add an extra $100 per month?
Fixed Monthly Payment: $862
Estimated Payoff Date: Aug 2014 (54 months)
Estimated Total Interest: $11,077
Estimated Total Cost: $46,408

Or simply to round up the minimum payment of $762 to $800 — an increase of only $38 per month?
Fixed Monthly Payment: $800
Estimated Payoff Date: Feb 2015 (60 months)
Estimated Total Interest: $12,352
Estimated Total Cost: $47,683

So, even paying just a little bit more every month (and doing pay/go with new purchases) makes a HUGE difference.

AMAZING!

^*unless Congressional Democrats evolve into vertebrates and pass health insurance reform sometime before I die.