A Life Sentence of Minimum Payments

a life sentence of minimum payments, financial lifeguard, christine luken

A life sentence of minimum payments?

During a recent coaching appointment, my client and I looked at her credit card statement and discovered something disturbing while putting together her debt reduction plan.  Although she doesn’t have an astronomical amount of debt (just under $8,000), my client felt like her credit card balance wasn’t budging.  Part of the problem is her interest rate: 19.49%.  Yikes!  That’s well above the average credit card rate of 15%.  (The following pictures are shared with her permission.)


My client can afford to make the monthly payments, but finds it hard to pay extra on a consistent basis because she’s self-employed with variable income.  Here’s the problem: if you only pay the minimum on your credit cards, you’re sentencing yourself to a lifetime of payments!


Right on her credit card statement, the bank shows how long it will take to pay off her debt if she only makes minimum payment: 70 years!  My client is in her 30’s, so she will be well over 100 years old by the time it’s paid in full!  How crazy is that?

However, if she makes a double payment, this credit card bill will be gone in three years.  This is the power of compound interest.  In the case of retirement savings, compound interest is flexing its muscle on your behalf.  But in the case of credit cards, compound interest is the throat punch you never saw coming.

How To Avoid a Life Sentence of Minimum Payments:

What’s the solution?  First, avoid the prison of monthly payments by paying for your needs and wants with cash.  If you are using a credit card, ensure that you have the funds to pay it off in full every month.

Second, be mindful of interest rates on your current debts.  I encouraged my client to go to her credit union and see if she could do a balance transfer to a card with a lower rate.  A 4-5% reduction could really accelerate her payoff.

Third, always pay more than the minimum due on any debts that you have.  I helped my client make a plan to pay extra on those months when her large cash infusions come into her seasonal business.  By following these steps, you can make your prison break from monthly payments and know the sweet joy of being DEBT FREE!

Need help breaking free from debt? Find out if financial coaching is right for you.

Spread the Word!
Christine Luken

Click Here to Leave a Comment Below 11 comments
Heather Lawrence - January 11, 2017

Question. What about the credit cards that have a 0% interest rate for a year if you port over the amount from another credit card?
Will you have to pay say 19% interest when your year is up backdated to the amount you opened it and the amount you used?

    Christine Luken - January 16, 2017

    If you pay it off within the teaser rate, you should be okay. If you don’t, the balance will be hit with interest. Be sure to read the fine print before you do a balance transfer.

Cynthia - January 11, 2017

Financial obligation can be so stressful. The big number is a scary number to look at. I think you have given great advice.

Milena - January 11, 2017

Wow- 70 years! I have never seen something like that before! We had some debt and thankfully are all paid off now.

Paula Atwell - January 11, 2017

It is pretty scary when you think about how much money we give to banks from interest over time. Credit cards are some of the worst offenders.

Mama to 6 Blessings - January 11, 2017

70 years, that would be crazy! We use our credit card for almost everything and psy it off at the end of the month. I like to get the rewards but no way do I want to get into debt.

Keikilani - January 11, 2017

Debt can take over so quickly. You explained very clearly solutions for getting out from under such a burden.

Kristin - January 11, 2017

These are great tips. I can’t believe it would take her 70 years to pay off a credit card! That’s insane!!!

Nicole - January 12, 2017

Smart tips! Credit cards are such an easy fallback and they’re designed to keep you in debt

Kristin - January 12, 2017

This is such great advice and something college kids could benefit from too so they don’t get in that death spiral!


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