I was playing around with a Credit Card Debt smallest amount repayment calculator that my husband discovered on Martin Lewis’ money saving web page. I could not believe how long it requires to pay off £1000 if you solely paid the minimum repayment.
As a result let us take this £1000 with an 18 per cent yearly interest rate and a minimum monthly payment of 2 per cent of the outstanding balance. How long do you imagine it might take to pay it off? 18 months? 3 years?
Way off! According to this calculator it might take 26 years and 1 month with interest incurred of £1885. So the total to repay might be the best part of 3 times what you borrowed.

Now if you’ve fallen off your chair I’ll offer you a minute because I certainly don’t blame you. I was appalled at just how long £1000 might take to pay off. Now I’m in no doubt you’ll agree that £1000 in the grand scheme of things does not appear to look a lot.

But why on earth does it take so long? Well 2 per cent of £1000 is £20. So you pay £240 over the year. In that case take into account that nearly £200 interest has been added to your original debt, then you are in reality simply reducing your original borrowing by £40 a year.

One Debt Management practice that has been used is to pay two times the smallest repayments. Which may be naturally in case you can’t afford to pay the entire lot off in the first place.

That way, that £1000 loan paid at £40 per month could nonetheless take you just over 9 years to pay off but the interest is only £495. So you’ve saved yourself 17 years and £1400 in interest. Bit better? I thought so too.

If you have quite a few balances then Debt Consolidation is perhaps the answer by transferring it to a zero interest credit card, or one with a an exceptionally low interest rate for the life of the debt. However remember it still pays to pay more than the minimum repayment.

Once you do go down the path of Debt Consolidation then make sure you do not let yourself to get into further difficulties and be tempted to get another card.
When you know that everyone in the UK on average owes just over £30,000 this puts things into a little perspective. It truly might take a lifetime to pay off that sum by means of solely minimum payments.

Is this in truth the way we plan to follow good Debt Management or do we want to get control of the situation and nip things in the bud before we find ourselves bound to debts that we now have naught to show for?

The earlier we claim back what is our responsibility the less we might find ourselves at the mercy of credit card lenders and free ourselves from a lifetime of ‘robbing Peter to pay Paul’. I don’t know about you but I’m sure you’ll agree there’s very much excitement in life for it to be spoiled by the toil of debt that has burst its boundaries.

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