Wide screen televisions are the rage and people
are willing to pay thousands of dollars for the latest models. If
you use your credit card to slowly pay off the charge, you may be
shocked to learn the actual total cost of that new TV.
Suppose you buy a $2,000 TV and elect to pay the minimum monthly
payment (for example, two percent of the balance or $10, whichever
is higher). For a card with a 13 percent annual interest rate, you
would pay off the initial $2,000 balance in 18.58 years (223 payments)
and pay $1,996.76 in interest.
A $5,000 purchase with the same terms results in making 323 payments
over 26.92 years and paying $5,542.23 in interest.
Before you run up large credit cards balances, be sure that you
understand the long-term financial consequences.
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Posted May 28, 2007.
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