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How Can My Debts be Paid within 3 to 5 Years with Lower Credit
Card Payments?
Have you ever noticed that almost all of your minimum payment
goes toward finance charges? Even with the newer minimum payment
calculations adopted by credit card issuers in 2006, normally
only a small portion of your payment goes toward the principal
balance.
Most credit cards calculate your minimum payment as an amount
sufficient to pay the finance charges and fees assessed on the
account for that month, plus 1% of the principal balance. That
means that your balance would only drop by 1% if you made a
minimum payment.
Every month that you make the minimum payment, your balance
will only drop by 1%. If you are still using the card, then your
balance will likely increase rather than decrease. If you are
able to reduce your balance, then your minimum payment will also
drop. Unless you keep your payments higher than the minimum
payment, it can take 10 to 20 years to pay off some credit card
balances.
Debt Management Plan
If your credit counselor feels that you could benefit from a
debt management plan, you will receive a tailored plan that is
designed to give you immediate debt relief with a planned payoff
within three to five years. The key is that your balances can be
reduced much faster when your finance charges are reduced.
Creditors that agree to reduce your rates allow you to
increase your principal payments, often while making a
smaller
minimum payment. Your payments are geared so that if one account
gets paid off early, it helps to further reduce the time for
paying off one of your other accounts.
Your debt management plan is designed so that you can make a
lower consolidated payment, pay much less in interest and make
steady on-time payments until your debts are eliminated within
three to five years. Imagine no longer having to make those
minimum payments every month. Our credit counselors are ready to
show you how. Give us a call today. |
