If you only make minimum payments, how long will it take to pay off a credit card? That’s a question too many Canadians don’t often consider. The Financial Consumer Agency of Canada has a handy credit card payment calculator tool, so I used it to punch in some numbers. Here’s an example:
If you owe $30,000 on credit cards at an 18% interest rate, if you only make the minimum payment it will take almost 29 years to pay off your credit cards! Even worse, to pay off your $30,000 in credit cards will cost about $60,000, because in addition to the $30,000 you owe, you will also pay an additional $30,000 in interest! That’s huge.
I suggest you do that calculation for yourself. Add up how much you owe on credit cards, look at your statements to figure out the interest rate, and then use the minimum payment calculator do the math. If the answer to the question “how long to pay my credit card off?” is more than a year or two, it’s time to consider other options like a consumer proposal.