Cut credit card interest costs by exceeding minimum payments

Paying just a little more than your credit card’s monthly minimum payment makes a big difference.

Let’s take a look at Tom and Sarah to see just how big.

Tom and Sarah both charge super-sleek, razor-thin laptops on the same day for $2,000. (Peter and Mary are both very cool cats.)

So each has a beginning balance of $2,000. If you think of debt as a pile of dirt that has to be shoveled away, Tom and Sarah are starting out with equal piles.

Both Tom and Sarah’s credit cards charge 18% interest — and require a typical minimum payment of the interest, plus 1% of the total balance.

Tom only pays the minimum — which means he’s keeping ahead of interest charges, but not by much.

Sarah, though, is a go-getter. She pays an additional $10 each month.

It’s like having a helper digging alongside her. So Sarah’s progress is quicker.

How much quicker?

By only making minimum payments it will take 131 payments — almost 11 years — for Tom to pay off his balance. Tom’s interest charges will add up to $2,039 — more than the computer itself.

Sarah, however, will cut her interest payments and time in debt almost in half. She’ll be in the clear after six and a half years and pay only $1,213 in interest.

By paying just $10 extra each month, Sarah saves $826 in interest charges and is done making payments 4.4 years earlier.

So Sarah can chill … while Tom’s still diggin’.

Want to see how minimum payments make your pile of debt stick around? Go to

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