The Evil of Credit Card Interest

I shared in an earlier post my plan for getting my self out of debt by borrowing against my 403(b) a little at a time to pay off one credit card at a time and paying myself back at a lower interest rate than the credit cards.

I’ve been questioned a few times about my plan and why I would want to borrow more money to pay off my debt. Here’s the deal. If a person owed $3,500 on a credit card at the age of 30 it would take them 40 years to pay it off by just making the minimum payment each month at 18% interest.

Credit Card interest compounds so quickly that the almost all of your minimum payment goes to the interest. If you made a $300.00 purchase on your Sears credit card and paid only the minimum balance your total purchase price is going to be at least $1,200.00.

So there you have my motivation! Credit card debt is bad but the interest you build from that debt is even worse. Getting yourself out from underneath the burden of that debt can and will be liberating but you have to have a plan because you won’t get there making the minimum payment.