Am I okay if I’m just able to make minimum credit card payments?
If you are struggling under mountains of credit card bills, you’re not alone. Per capita credit card debt has been at record levels in recent times. Many people in Northwestern Ontario are struggling and can’t make significant payments on their credit card debts. Instead, people make the minimum payments, doing enough to keep the card companies at bay, but not making any real impact on their total debt levels.
To illustrate the fact that minimum payments do not make any real contribution towards the repayment of debt, the Canadian Ministry of Finance has mandated that credit card companies disclose how long it would take you to pay off a credit card while making only the minimum payments. For instance, if someone has a credit card of around $2,000, with a standard interest rate of 18%, the minimum payment would be around $40 each month. By making these $40 payments each month, it would take almost 31 years to pay off this $2,000. 31 years to pay off $2,000! And that’s if you never charged another thing to the card! Almost $5,000 of interest would result. And that’s just on a relative low credit card balance of $2,000… many people have credit card debts much higher than that. You can see how being able to make the minimum payment isn’t really helping you to get out of debt fast. Being allowed to make only a minimum payment is useful if you have a month where you are tight on money, but being able to make only minimum payments for an extended period of time is a definite warning sign of financial difficulty. Take a look at your own credit card statement for this disclosure and you will see for yourself how long you would be paying minimum payments for.
As result, if you are only able to make minimum payments, and don’t foresee this changing anytime soon, you should really talk to someone who can provide you with debt help in Thunder Bay, Dryden, Fort Frances and the rest of Northwestern Ontario. At Grant Thornton Limited, we can discuss solutions with you that will bring actual debt relief, as opposed to the false sense of security provided by making minimum payments. Call us at 310-8888 or email us today at firstname.lastname@example.org for a free, no obligation consultation.