Sneaky Credit Card Trick #6 - Lower Minimum Payments

[This post is written and copyrighted by FIRE Finance (http://firefinance.blogspot.com).]

To boost their profits, credit card companies often lure their clients by sending lucrative offers with lower minimum payments on debts. The lowered minimum payments can be as low as 2% of our owed balance.

What is sneaky about lowering minimum payments?

Stay away from this gimmick at all costs. Else we might end up paying the minimum on our balances for the rest of our lives. A 2% minimum payment means we are going to pay a way lot more as total interest on our debt. Perhaps it might take us forever to pay off our balance.

Bankrate has created a useful true cost of paying the minimum calculator. We can use it to check how much longer it will take to pay off our balance with a lower minimum payment. Also, we should add up the monthly interests to see how much extra we've got to pay because of the lower monthly minimums.

Way(s) out?

It's best to avoid such offers. If we try to pay a higher % of our debt as our monthly minimum we'd end up paying off our balance faster. And that would save us a lot of money in interests too.

Series

» Sneaky Credit Card Tricks - An Introduction
» Trick #1 - Over The Credit Limit Fees
» Trick #2 - No Grace Period
» Trick #3 - Late Fees In Minutes
» Trick #4 - Convenience Checks
» Trick #5 - Skip A Payment Invits
» Trick #6 - Lower Minimum Payments
» Trick #7 - High Cash Advance Fees & Rates
» Trick #8 - Fixed Rates are NOT Fixed
» Trick #9 - 0% APR - Take Care with the Fine Print
» Trick #10 - Beware of Disability Coverage & Card Theft Insurance

Image Source(s): iStockPhoto

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