A Life Sentence of Minimum Payments, man with ball and chain

A Life Sentence of Minimum Payments

A Life Sentence of Minimum Payments, man with ball and chain

A life sentence of minimum payments?

During a recent coaching appointment, my client and I reviewed her credit card statements. We 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. However, she 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!

credit card statement showing minimum payments and interest rate

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 or debit card.  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? Let’s chat and see which one of my solution is the best fit for you!