iCare Community Magazine
How Long Does It Take to Get Out of Credit Card Debt
The following table shows how many months it takes to pay off $10,000 of credit card debt at different payment and interest levels.
Get out of debt! Getting out of credit card debt is all about two things: 1) Making the largest payment you can afford, and 2) making sure your debt is at the lowest interest rate. Use the chart below to learn the advantages of having a low interest rate and of making a larger payment than the minimum! By optimizing your payments and watching what you spend, you can get out of debt much faster than you think.
How to Read the Get Out of Credit Card Debt Table.
This table can be used in several ways (be creative), but the most effective is to use it to find the advantages of paying off your debt as quickly as possible.
The table shows how many months it takes to get out of debt, assuming a $10,000 loan at various interest rates. Look closely at the table and pretend that you have $10,000 in credit card debt.
Say you pay the minimum payment of $150 that your credit card company requests. If you make only that minimum payment each month, you’ll be paying down your debt for 6 - 12 years, depending on your interest rate. Now, let’s say you make triple the minimum payment ($450), your estimated time until you get out of debt shrinks to 2 years!
Now look at the case where you have $10,000 in credit card debt and you can only afford to pay $150 per month. In this case the interest rate you pay is of utmost importance. In fact, the difference between paying 16% interest and paying 6% interest results in paying off your loan almost 8 years earlier! That’s why it is of utmost importance that you always pay the lowest interest rate possible on your debt.
Study the get out of debt table below to help you understand how long it will take you to get out of debt. If you have $5,000 in debt, divide the monthly payment numbers by two, if you have $20,000 in debt, multiply them by two. By using this table, you should realize that you need to both minimize your interest rate and maximize your monthly debt payment. Need to lower your interest rate? Start by finding the best credit card rate and check into lowering your mortgage rate.