Did you know that most credit card companies define your minimum payment as finance charges + over-the-limit & late fees + a percentage of the principle?  If you were to pay just the minimum due each month, you would spend the rest of your life paying off these bills.

For example, if you have a credit card with a $7500 balance, 17% APR and 2.5 % of principle payment, you would be paying for 329 months (assuming no late fees and no additional charges), that’s just over 27 YEARS.  The initial minimum on this is $187.50.  Now if you were to take this initial amount and fix it, you can cut this down to only 60 months, or 5 YEARS, an 81% reduction in time.  So go back to your budget and make sure that the highest minimum payments you have made recently are set as your payment levels for each card.  This will help you maintain your budget.

Later today, I will post about various approaches to debt repayment as part 2 of this series.