Credit Card News Paying Minimum Credit Card Amount Could Prolong 'debt Sentence' 8462660
Paying minimum credit card amount could prolong ‘debt sentence’
10 May 2005
Independent price comparison service moneysupermarket.com found that this kind of extended debt repayment time could be expected by a credit card holder who paid only the MMR on a typical credit card balance of £2,100.
At a standard APR of 14.9 per cent and paying the two per cent minimum requirement, a borrower with this balance could take 27 years and five months to pay off the debt – along with £2,719.18 in interest.
Moneysupermarket.com found that if the same borrower upped the monthly repayment just a little to five per cent, the repayment time could be drastically reduced to eight years and four months, saving £2,096 in interest.
“They say that nothing ever comes for free; a statement true within the credit card world of seemingly free money,” comments Stuart Glendinning, director of credit cards at moneysupermarket.com.
“Where possible, clear the balance outstanding to minimise the interest charges incurred, or consider transferring the balance to one of over 150 credit cards that offer zero per cent APR for an introductory period.”
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