Posted by Mike Smith :: April 21, 2008 @ 11:01 am

Despite the widely covered negatives of only paying the minimum on their credit cards, people still do it. There are only a few possibilities why this detrimental behavior continues. Either people still haven’t heard about the dangers, they are living beyond their means and can only afford the minimums, or they don’t care about the implications.

Those Who Still Haven’t Heard

The high cost of only paying the minimum on a credit card has been so widely covered I suspect that very few do so out of lack of knowledge of the problem. Just in case there are any readers who need a reminder, here’s an example:

A typical minimum payment might be 2% of the outstanding balance or $10, whichever is greater. Paying the minimum on a $2,500 balance at 18% interest will take 34 years to pay off and cost $8,781. Imagine if you were still paying off a purchase from 1974!

Those Who Can Only Afford the Minimum

Those who can only afford to pay the minimums are living beyond their means. Whether they bought more than they could actually afford, or have taken a hit from the mounting interest and fees, they are in an unsustainable position. Making a proactive change such as consolidating high-interest debt with a person-to-person loan can offer a second chance to get things right.

Those Who Don’t Care

People in this category are beyond the scope of this blog. We can try to teach the uninformed and offer suggestions to those who have identified problems in their finances. If you are aware of a problem and choose not to do anything about it, we really can’t help. All of the advice in the world will not help you if you are not open to the suggestion.

We hope that the majority of those who only pay the minimum on their credit cards are willing to reconsider. In time, perhaps even those who don’t care about the high costs will have a change of heart.