I just got my credit card bill. It’s over 5000 grand for the month. Now – before you start thinking – what is this girl doing, giving out financial advice when her credit card bill is so high?! 
It does have mostly essentials on it (transportation, groceries, gas), but I’ll freely admit that it has some not so essentials on it (dinner out and Mr. Canuck Buck’s trip to HMV). The biggest chunk is medical, alas – something that is not covered by our health care system or insurance. So, I am normally a tad more frugal.
Anyway, a note on the last page of the bill caught my eye. It says “If you only make the minimum payment every month, it will take approximately 21 year(2) and 11 month(2) to pay the entire new balance shown on this statement.
21 years?! Almost 22 years? Are they nuts? I’m hoping to be retired in 21 years – not still paying off a credit card bill I ran up in my 30′s. And that’s assuming I don’t ever spend anything else again on this credit card.
I had friends in university who just paid off the minimum on their card and thought they were doing well. I didn’t really have that option – my parents did not co-sign anything for me (I never thought to ask!), so the most credit I could get was 500 bucks a month. I remember a “friend” lording it over me that she had a higher credit limit than me because her parents had cosigned for her. She was much quieter about the whole situation once she had to start paying off her bill.
I guess I just can’t understand why on earth you would take the route of only paying the minimum. I know I’m lucky I’ve never been in truly dire financial need where I couldn’t pay off my credit card bill, but I’d like to think good sense, and a bit of restraint have helped me from running up a bill I couldn’t afford.
If you are in the situation – get the heck out of it! While you really need to take a good, long look at your spending habits, you may need to take some drastic measures in order to pay your bill of faster. There’s anything from getting extra hours at work, to transferring to a lower interest card, to negotiating with your credit card company. They’re all worth a shot – cause who wants to be paying a bill you racked up 20 years later!
Have you ever just paid the minimum on your credit card? How did you break free from this habit?
Wow. That is a LONG time. Plus you probably would have tripled the bill by then, just in interest! When I was 18 and first got my credit card, I only paid the minimum and it took me forever to pay it off. I put SO MUCH stuff on that card that I couldn’t afford.
With my first credit card I also made the mistake of just paying the minimum. I just didn’t stop to realize how much interest I was paying that way. I smartened up a lot after that first credit card though. I pay off the full balance each month now. For a while I even got all obsessed with paying off the balance multiple times per month. These days though I accept the interest free period and just pay the full balance before the payment due date.
Haha! Man,that woudl take forever to pay off! The minimums on what you must pay each month are usually so low that it’s usually possible for peopel to pay at least a little more! And they should! Even $5 more is good. Happily, my wife and me are out of credit card debt and haven’t looked back!
Daisy – Well, at least you learned your lesson nice and early in life!
MM – Sounds like you’ve reached a nice balance in life now with paying credit cards..
TB – good for you! And I agree with you – any extra you can pay is good.
Credit Cards can lead you down 2 paths the obvious one “debt” or perks such as points, gift cards etc. Most people fall into the credit card trap because simply it’s “available”. If banks would stop giving credit to so many people that can’t afford it things might get easier for some. Once the debt builds on cards well the minimum payment is all they can afford. We are not owed these cards, these cards were not meant to be our life line or second income so we need to stop treating them as so. Many people may get pissed saying prices are going up, we can’t afford this and that so we have to resort to a credit card.
That’s bollocks as far as I’m concerned especially when they are using their Iphone to search the Internet, from home while watching the 55inch Tele they have on credit, driving their leased car on the ETR 407 to get to work quicker. I could go on, and I’ve seen lots of budgets, and people who procrastinate and try to justify expenses. It’s simple, “stop spending” and Spend less than you earn, if you can’t pay your credit card in full you shouldn’t be using one. If one feels the need to have one in case you travel or for hotels that only accept CC’s then put it in a drawer until they need it. If they can’t afford their mortgage get a second job or sell the house and rent for a while until they get back on their feet. Digging a hole of debt that they can’t get out of is the worst thing anyone can do and won’t help with one’s credit score neither.
Cheers and great post!
Mr.CBB
Mr. CBB – hmm..how do you really feel about this issue? It’s hard to tell. :p. In all seriousness – yes, it is ridiculous what everyone is now “entitled” to. A co-worker was telling me about a 10 year she saw get a brand new Blackbery Bold. If you get that stuff at 10, what the heck do you have to look forward to?!
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I learned the hard way and paid interest only when I was younger. It took a long time to clean up that mess. I am so glad I know better now and avoid this massive trap.
Hey PET – yup, while some lessons are hard to learn, it’s good to learn them when you’re young!
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