The Hard Reality of My Credit Card Debt

Today, I took a close look at my credit cards. I have six (6) cards and my monthly payments for those six (6) cards equal an astounding $2477.00. This is the first time I have ever added them all up and I am still a little shocked myself.

Of that amount, $1473.00 goes toward interest payments. Only $1004.00 of my $2477.00 in payments goes toward the principal amounts that I owe. I am disgusted. The good news is that I am no longer using my credit cards, so the full $1004.00 per month can be calculated in reducing my original $161,000.00 in debt.

To reduce my monthly interest payments (or finance charge), I decided to set up the ability to make on-line payments. I expect this to reduce my monthly interest payments. My old method of paying bills ensured that I incurred the highest possible finance charge. I used to hold onto my money until the last possible day and mail checks to my creditors.

I thought that I was being smart by holding onto my money longer. All I really did was ensure that I ended up in the red as I would time my withdrawals prior to payday knowing that my paycheck would be deposited in time to cover any checks or withdrawals that I had made. Sometimes it worked and sometimes it didn't. When it didn't, I'd end up paying multiple $20.00 charges for being overdrawn in my account. I also ensured that my average daily balance (upon which the finance charge is calculated) on my credit card accounts would remain high. By holding onto my money as long as possible, I was keeping my average daily balance as high as possible, thereby, incurring a high monthly finance charge.

I expect to see my monthly interest payments decline as I pay my bills on-line and on payday, causing my average daily balance to be lower. I will no longer hang onto my money as long as possible when it is to my detriment. Even with my new method of paying my bills, the banks will get a great deal of my money each month that they "earn" as interest. I have learned a very hard lesson about credit cards and can't imagine using them ever again. Several of my payments have hit bringing down my outstanding debt to just over $157,000.00.