# The Dangers of Minimum Payments & How to Pay More Than the Minimum Payment

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## The Dangers of Minimum Payments

While it might be tempting to pay only the minimum amount due each month on your credit cards, it can cost you a significant amount of money over the life of your debt. The minimum payment is calculated so low that it can often take more than twenty years to pay off your debt if you only pay the minimum amount. After you have done everything you can to lower your interest rates to a manageable range and you have prioritized which credit card you will pay off first, then it is time to figure out how to pay more than the minimum on that credit card.

There are many excellent resources on budgetting your money, so this article won’t attempt to cover everything in that category. However, for eliminating your credit card debt, there is one very important thing to remember when creating your budget. You need to allocate enough money towards credit cards every month to be able to pay more than the minimum payments.

So, add up all of your minimum payments for last month. Let’s imagine that they add up to \$365. Then, you need to figure out how much more you can pay towards your credit cards. If you can allocated \$500 of your budget to your credit card payments each month, then you are going to be \$135 closer each month to realizing your dream of zero credit card debt.

## How Will This Actually Work?

One of the best tools available for helping you do the calculations is the minimum payment calculator found at BankRate’s website. This tool will allow you to enter in your credit card debt and your minimum payments and it will calculate how long it will take to pay off your card. It will also let you enter in a fixed amount that you can pay each month and it will calculate that for you too.

Here is an example: If you have \$2000 in debt on a credit card, 18.5% interest, and the minimum payment is 2.5% of your debt, here is the difference between paying only minimum payments (around \$50 the first month) and paying \$100 every month until it is paid off.

Minimum Payment: Will take more than 18 years to completely pay off and you will pay more than \$2600 in extra interest.

Fixed \$100 Per Month: Will take only 2 years to completely pay off and you will pay less than \$400 in extra interest.

If you have more than one credit card to pay off, then use this credit card minimum payment calculator instead. The bottom line is that you need to pay more than your minimum payment if you want to save money and eliminate your credit card debt quickly! For more on this topic, check out: Your Guide to Reduce Credit Card Debt.

## This post is part of the series: Eliminate Credit Card Debt

Credit card debt can build in the blink of an eye, but it takes a focused effort to start really making a dent in the dollar amount. These proven techniques have helped many people reduce and even eliminate their credit card debt once and for all.