Do you see your balance go down at all after you make your monthly payment? Do you feel like you are making progress in paying off your debt? If not, then you may be suffering from high interest rates.
Lowering your current interest rates is perhaps the greatest benefit that DebtWave Credit Counseling, Inc. offers our clients. If your main goal is to get out of debt, then the first thing you should look at is your interest rate with each account. Keeping your interest rates low is a vital ingredient in becoming debt-free.
For example, how long do you think it would take you to payoff $5,000 at 21% interest by paying just the minimum required payment? 5 years? 10 years? 20? Try over 30 years. And that’s assuming no further charges are made on the card.
*Below demonstrates an example of the impact interest rates have on getting out of debt. Taking the same amount of debt of $5,000, look at what a difference the interest rates make:
Interest Rate
21%
15%
10%
5%
Monthly Payment (2%)
100
100
100
100
Mo. Finance Charge
87.50
62.5
41.66
20.83
$ Going to balance
12.50
37.50
58.34
79.17
Years to pay
33.3
11.1
7.1
5.2
Typically, we are able to reduce your interest rates below 10%. And sometimes as low as 0%!!! It all depends on which bank you have the account with.
Payoff period is calculated by dividing Total Debt by $ Going to Balance.
