Credit Card News Credit Card Payments Cause Debt 15070345
Credit card payments cause debt
20 October 2005
Financial charity Myvesta warns that mimimum monthly credit card payments are designed to benefit the credit card company and not the consumer, and actually cause debt to become worse.
“The monthly minimum payment is designed to maximise profits for creditors, not get you out of debt. By only paying the minimums each month you will spread your debt repayment out for many years and pay thousands more in interest,” Myvesta chairman Steve Rhode told myfinances.co.uk.
The charity calculated that by making the minimum monthly payment each month, credit card holders could stretch a £2,000 debt to £2,615.43.
Myvesta recommneds that credit card holders pay off as much of their balance as they can each month, instead of just the minimum balance.
The charity also recommends transferring as much money as possible from the credit card to a card charging lower interest, ensuring that the credit card debt with the highest interest is paid off first.
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