Sticker Shock

One of the nice benefits of the new credit card laws is the requirement that your creditors disclose exactly what the impact of paying just the minimum payment would be for your financial future.

And depending on how much you owe and/or how much your interest rate actually is, you may need to make sure you’re sitting down before you open your next credit card bill.

I try never to pay just the minimum amount. There are a few credit cards right now where I’m paying exactly that amount, by automatic payment. In the meantime, I’m using two different “get out of debt” strategies at the same time.

The first one involves creating a “snowball” effect that begins with paying off the very smallest debt you have. The theory is that being able to say that you’ve successfully paid off an account gives you such a good feeling that it will help motivate you to do the same with the next-largest account. So you take the amount you were paying to the now-paid account, add that to the amount you’re paying to the next-largest, allowing yourself to pay it off sooner.

There’s a lot of logic in that strategy, because there’s nothing like writing “Paid in Full” on a check or seeing it on a follow-up statement with a big fat zero in the balance column.

The snowball effect has gotten a few of my smaller accounts taken care of so far.

But here’s where my strategy changes a bit:  it just so happens that my largest bill is with a credit card that happens to have the highest interest rate of all of my bills.  I owe more than I’d like to, definitely more than I’m willing to admit here.  In any case, I’m taking the amounts I was paying to the few smallest accounts and adding that to the amount I’m paying to that big monster of an account.

When I got my most recent bill, the “minimum payment warning” section of the bill informed me that if I made only the minimum payment, it would take me more than two decades to pay off the card, and I’d end up paying almost three times the current balance.  On the other hand, by paying just less than 50% more than the minimum payment will see me pay off the card in literally a tenth of the time, and I’ll end up paying less than half of that 20+ year total.

With the snowball plan, I’ll be able to pay more each month than the amount it recommended, which means that it’ll take me less than three years to pay it off, at which point my worst bill of all will be taken care of.

Never to be revisted.

And believe me: unlike years past, this time, it is safe to say “never.”


  1. Ya most people are not accountants…thus the reason they are in the financial trouble they have so I’m glad they have to report this now.

    I remember my dad telling me a credit card solicitor called once & what a chuckle he had with him. This poor caller getting my dad. This caller was all about the low interest rate on their card. My dad said I have 0% interest rate already. The caller could not believe this. My dad said he had 0% interest rate because he ALWAYS pays off his amount each month. The caller could not even understand what that meant because of course that is unheard of. HA! My dad said he really could not understand what he was telling him. He had to say I charge whatever $800 I pay off $800 & he still was not getting it. By then may dad just had to see how long it took this guy to get it. My dad is old school also, you don’t charge what you can’t pay. The man has credit cards with limits you can buy a house with. Seriously, my mom is like I don’t leave the house with them. You should see the car salesman’s look when he would say “check” and pay for the care right away. Of course I’m not in that situation let me tell you!!!

    But interestingly there is also some bad consequences I guess if you do pay off your cards on time, which I think is bogus. You see they make money off you if you don’t so you are not a “good customer” if you pay off your cards each month. I personally think we should go back to the idea of not charging. I mean it hurts everyone really. I mean what do we need them for? Ok, occasionally you have an emergency, flat tire etc and you won’t have the $ until your next paycheck so you can have it taken care of it & pay the card the next fri (YOU SHOULD!) but other than that. I mean I can’t wait a few weeks to get that hot pair of shoes? They’ll probably be on sale if I wait! HA! And if Cindy next store gets them & I don’t will I remember that when I’m a senior citizen. I can see myself in my rocking chair, rocking back and forth and ruminating “That Cindy she had those shoes!” Give me a break! Maybe we really have 2 poor/poverty classes. Those who have no money & don’t use credit cards & those who have no money & use credit cards and then don’t pay them off or declare bankruptcy. Boy you put them into the picture & you may have a higher percentage of poor!

  2. Once in awhile I take two months to pay a credit card bill, it it’s too much to handle; but for the most part, I never run up a credit card bill I can’t pay in full as soon as the bill comes. Since that means they never get interest from me, I expect they’ll eventually figure out some way to make money from people like me.

Leave a Response

We'd love to hear from you, but remember all comments must be respectful. We reserve the right to remove comments that do not follow our comment guidelines. Click here to review our comment policy.

Your name, as provided, will display on the website with any comment you leave. Your email address and your browser’s IP address does not display publicly and we do not share or sell your email address or IP address to anyone.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Patrick is a Christian with more than 29 years experience in professional writing, producing and marketing. His professional background also includes social media, reporting for broadcast television and the web, directing, videography and photography. He enjoys getting to know people over coffee and spending time with his dog.