If you pay just the minimum due each month on an $8,400 credit balance, you will wind up having to make 365 monthly payments before it goes to zero. That’s thirty years and five months’ worth of payments. And that’s assuming you never charge another dime on the card, never get hit with a late fee, and are never billed for an annual service fee.

Can you imagine it? Thirty years and five months’ worth of payments — and that’s for a card that charges 18 percent annual interest. Many cards charge much higher rates — some as high as 29 percent.

Here’s the bottom line: You cannot become an Automatic Millionaire if you run up credit card balances and pay only the minimum due. All you’ll accomplish doing that is making the credit card company rich while you stay poor.

— David Bach, The Automatic Millionaire

This entry was posted on Tuesday, April 11th, 2006 at 12:02 am.
It is filed under Debt, David Bach.
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