How Long Does It Take to Get Out of Debt, Depending on Your Monthly Payment
Minimum credit card payments are designed to keep you in debt for a long time . Obviously, the more you pay each month, the faster you will get out of debt. To overlay a timeline on it, check out this chart on Business Insider. It tells you how long it will take to pay off your debt, depending on how much you pay each month.
The chart also takes into account your interest rate. Generally, the higher your interest rate, the longer it will take to pay off the debt, because not all of your payment goes towards the principal. Business Insider explains:
Let’s say you have a debt of $ 5,000 and you commit to pay only 3% – or $ 150 – of that debt every month. If your credit card is charged an annual interest rate of 14%, it will take you 43 months (about 3.5 years) to pay off your debt. But if you increase your payment to 10%, you can pay it back in less than a year.
It is interesting to see how much your debt repayment goal can vary depending on your rate and how much you can afford to pay each month. For more details, navigate to their full publication at the link below.
Image: Sky Gould / Business Insider
This Chart Shows You How Long It Will Take To Pay Off Credit Card Debt | Business Insider