How $1,000 Becomes an 11-Year Loan

Making only 'minimum repayments' can be a dangerous thing.

Assume you have a typical credit card at 16% p.a and minimum payments required each month of 2.5%.

Now assume you charged just $1,000 on that card and made no other purchases. You now have a debt with interest.

Your first minimum payment of $25 will be around $13 towards interest and just $12 off the debt.

To pay that credit card off making only minimum payments would take over 11 years !!

If you think that is terrifying, consider this: during that time you will have paid around $860 in interest. That is a whopping 86% of the principal on top!!

Minimum repayments may be tempting but be aware they come at a high price.