Q1: How long will it take to pay off my credit card?
The payoff time depends on your balance, interest rate, and monthly payment amount. Making only minimum payments can take years and cost thousands in interest. Increasing your monthly payment significantly reduces payoff time and total interest paid.
Q2: How much interest will I pay on my credit card debt?
Total interest depends on your balance, APR, and payment amount. Credit cards typically have high interest rates (15-25%+), so even moderate balances can accumulate significant interest over time. Paying more than the minimum is crucial to minimize interest.
Q3: What is the best strategy to pay off credit card debt?
Two popular strategies: 1) Debt avalanche - pay minimums on all cards, then put extra money toward the highest interest rate card. 2) Debt snowball - pay off smallest balances first for psychological wins. Both work, but avalanche saves more money.
Q4: Should I pay off my credit card or invest?
Generally, pay off high-interest credit card debt first (especially if APR > 10-15%) because guaranteed savings from avoided interest usually exceed investment returns. Once debt is paid, you can redirect those payments to investments.
Q5: Can I negotiate my credit card interest rate?
Yes, you can call your credit card company and request a lower interest rate, especially if you have good payment history. Mention competitor offers or threaten to transfer the balance. Many companies will work with you to keep your business.
Q6: What happens if I only make minimum payments?
Making only minimum payments extends payoff time dramatically and maximizes interest paid. For example, a $5,000 balance at 18% APR with minimum payments could take 20+ years to pay off and cost thousands in interest. Always pay more than the minimum when possible.