If you own a credit card that charges a 12 percent annual rate, how long will it take to pay off a $5,000 balance if you pay the minimum required payment each month?
B. 19 years
According to the Federal Reserve, it will take an estimated 19 years to pay off $5,000 at 12 percent if you make no other charges on the account and pay only the minimum payment each month. If, instead, you pay $100 per month, the balance will be paid in six years. Monthly payments of $250 will erase the debt in less than two years.
The Federal Reserve provides a free online credit card repayment calculator.
For step-by-step instructions, click here: Credit Cards, October 21
For questions, contact Bill Pinkovitz