Most of you know this, but those of you who dont this is intereresting
Why is My $20 Bill Only Worth $5 Bucks?
Credit Card Management
© Leslie Sausage
Keep this in mind next time you're tempted to "put the pizza on plastic".
The following information is based on an interest rate of 16.99% to 18.99%:
If your balance is $1000.00 and your minimum required payment is $20.00, then $15.00 of the payment goes to interest and only a small portion pays down the principal. If during the next month you charge $15.00 or $20.00 on that card the same thing happens again.
Here's a common scenario for many credit card users...
With a $1000.00 balance on your card and $20.00 minimum payment due ($15.00 will be for interest. Only $5.00 will be for the principal to actually pay down the balance. Your new balance is $995.00.
Yep! You paid $20.00, but it was only worth $5.00
By only paying the minimum due, you'll not be able to get off this merry-go-round for years!!
Hugs Sandie