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Welcome to DebtWave Credit Counseling's Smart With Your Money Video Tips
today's video the benefits of fix credit card payments
in our previous video tip the dangers of making minimum payments
we learned how making only minimum payments every month would make it
almost impossible to pay down the balance on our credit cards
in this video
we're going to show how a fixed payment plan can make a drastic difference on
how much quicker we can pay down the debt and not to mention how much we can
save in interest over the life of the balance
using our credit card debt calculator
we will use the example from earlier credit card calculator videos in this
series
the balance we are carrying our credit cards as twenty thousand dollars
with an annual percentage rate
of twenty percent
and a minimum payment of four hundred and fifty dollars once the calculations are
complete you'll remember from our last video about the dangers of minimum
payments
the first month's payment of four hundred and fifty dollars is broken down
by the finance charge and the principal paid
at twenty percent three hundred and thirty three dollars goes towards the
finance charge
and only one hundred and sixteen goes towards the principle
also known as your balance
now notice all the payments after that the payment goes down every month
and the reason for this is because they'll base
the minimum that you pay every month on a percentage of your balance
in this case two point two five percent of the balance is almost impossible to
make any headway towards Paying it off
so what we do
where do we start
we come up with a plan
we'll start with the same minimum payment but this time we commit to
making the four hundred and fifty dollars a fixed payment each and every
month
by committing to this you'll be amazed at how much time and money you can save
big different right
if we did this without ever using a credit card again we would pay it off in
a little more
and six-and-a-half years that's a heck of a lot better than fifty one years it
would take when paying the minimum payment
not to mention how much interest you would save over the life that balance
the way this plan works is simple
with every month that we make that four hundred and fifty dollar payment less
goes towards the interest and more goes towards the principal payment
this will work if we commit to our budget by paying the same amount
until the balance is paid off paying down debt is not easy nor is it fun but
it can be done and save us thousands of dollars overtime to see how quickly you
can pay off your debt and how much you could say verses paying the minimums
visit DebtWave's debt calculators on our webpage at Debtwave.com
go to the calculator tab at the top of the home page
then select credit card debt calculators and just type in your numbers thank you
for tuning in to our Smart With Your Money video tip
if you have any questions or a topic you would like to have addressed
please submit your ideas to us at education@debtwave.com or you can
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if you have any questions about your own personal situation i would like to speak
to one of our certified counselors
please feel free to give us a call at toll-free eight eighty eight
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