If you own a credit card, or several credit cards at that, you are more than aware you’re your bills can pile up. You are not alone: millions receive these monthly credit card statements en masse with many overwhelmed by that monthly balance, or balances. It can seem like you cannot possibly ever repay. If you are in over your head and in the pattern of using your credit card, or cards, for those daily necessities merely making your monthly minimums is an attractive option as you hide from hefty credit card balances. But as you shall see, this behavior can create a holding pattern. Think of it as trap for your creditors to earn as much money in interest from you as possible. It is the Minimum Payment Trap.
Especially today, many of us are among the millions currently out of work or stuck with reduced work schedules and taking in less income. You may be running up that credit card debt or have several cards already maxed out. You may be completely tapped out all while struggling to buy basic necessities for yourself and your family.
With your cards straddling your credit limit or with high balances, this sets you up for a desperate situation. You enter and go round in an expensive cycle where you kick the bucket down the line for a later date all while your banks reap high interest charges to your accounts and your balances seem to be stuck.
The less you pay each month, the longer it will take to pay off. However, it is even worse for those paying for those necessities of life. Your money becomes as expensive as it could get. Unpaid principal accrues, gets maxed out, and your minimum payment goes mostly toward your debt’s interest.
If you are stuck in the Minimum Payment Trap, you may also be subject to a reduced FICO score if you are a maxed out borrower, and many make late minimum payments. Fees, penalties, and interest adds up until your credit cards leave you drowning in debt. It is a horrible situation in which to find yourself.
If you feel trapped and under water, let us help you take back control of your finances and future. Contact us today and rest assured that we will be your guiding light.