Arvest Education Center
The Cost of Credit
While that midnight pizza run or great new sweater may have seemed like a good idea at the time, have you ever thought about how much all those “good ideas” cost you?
For example, you charge a $10 pizza on your 19.50% APR credit card your freshman year of college. With all of the other charges and payments you have to make, you don’t make more than the minimum payment on your card until you’ve graduated and got a job, so the pizza continues to sit on your balance. By the time you pay for your pizza 5 years later, instead of costing $10, it now costs $26. Multiply that by 15 pizzas your freshman year that cost $150, you end up paying almost $400.
Paying only the minimum balance on your credit cards can cost you big in the long run. For instance, say you have a $1,500 balance on a modest 14.99% APR card, and make $100 in new charges every month. If you made only the minimum monthly payment of $125, it will take you more than 10 years to pay it off. However, if you pay a bit more at $174 per month, you can have that debt paid off in only 2 years. That’s quite a difference.
This content has been provided by whatsmyscore.org and is intended to serve as a general guideline and may not apply to every individual situation.