The Long-term Impact of Credit Card Balances:

Balance on Credit Card

Annual Interest Rate (APR)

Number of Years Just Paying the Minimum

You owe the total amount, but interest is shown so you can see the impact.
FACT: After 5 years the total interest payments are greater than your balance even though the balance remains the same.(20% ARP, min. payments)

 Total Amount Owed: $4 
The equation is $ 4 + $ 4 (4)(4)

Interest Portion: $4 
The equation is $ 4 (4)(4)

Total amount owed if you don't reduce the balance

$

Total amount owed if you can reduce the balance by 25%

$

Total amount owed if you can reduce the balance by 50%

$

Total amount owed if you can reduce the balance by 75%

$



Wealth Creation Opportunity:

Pay off your credit card every month and invest the money you would have paid in interest. Your investment will double every 10 years. (7% rate of return)

 The balance after 10 years is $ 4 (1+0.07 )10
  10 year Total Benefit:   $4 

The balance after 15 years is $ 4 (1+0.07 )15
  15 year Total Benefit:   $4 

The balance after 20 years is $ 4 (1+0.07 )20
  20 year Total Benefit:   $4 

The balance after 25 years is $ 4 (1+0.07 )25
  25 year Total Benefit:   $4 

The balance after 30 years is $ 4 (1+0.07 )30
  30 year Total Benefit:   $4