From the Desk of McCarthy Law Century City Attorney, Vivian Lum:
Have you ever wondered why a credit card company would allow you to charge up your credit card and only require you to pay a fraction of that amount per month, i.e., the minimum monthly payment, in order to keep your account in good standing? Is it because the credit card companies are filled with benevolent individuals who are truly concerned about whether you are able to pay your other bills so they only require a small payment each month? The answer is no.
The reason why credit card companies love to have you keep a balance on your credit card is so that you can owe them more money. That’s right…the longer you keep the balance on that card, the more interest they get and the more they get paid. As this article points out, by only making the minimum monthly payment, it can take 10 or 20 years (20 YEARS PEOPLE!) to pay off that credit card balance. http://www.creditcards.com/
Do you really want to be an indentured servant to your credit card company for the next 20 years? I sure don’t. Even if you pay a little more than the minimum monthly payment each month as most Americans seem to be doing now, being obligated to your credit card company for the next 10 years still is not an uplifting option. Get out of debt by putting a financial plan in place that includes settling your credit card debt i fyou don’t see a way to pay it all off within 12 months.
Usually, a debt settlement plan can get you out of debt far more quickly … giving you financial freedom to invest in your retirement, save for your children’s schooling, or put away money for unexpected expenses life likes to throw at you. I would rather take that money I save with the debt settlement plan and put it towards my retirement than pay a credit card company, wouldn’t you?