The Simple Formula for Paying Off Your Credit Card Debt

As a native of Chicago, I personally have been a fan of Terry Savage’s work for quite some time now. Terry Savage is a registered investment advisor and syndicated columnist for the Chicago Sun-Times.

She has an exceptionally outstanding article which was published in the Chicago Sun-Times on July 13, 2009 that I feel compelled to share. The article is entitled Credit Card Quagmire and I suggest you check it out by clicking that link.

In the article Terry explains a simple formula for completely paying off your credit card debt in less than three years.

The formula is:

Double the current minimum monthly payment each and every month and do not make another charge on your credit card and your balance will be paid in full in less than 3 years.

A simple yet elegant solution to credit card debt isn’t it? Of course, it’s easier said than done no doubt. First off, you must be able to afford to double your minimum monthly payment in order to make it work. And secondly, you have to have the discipline not to make any more charges to your credit card.

If you can swing both of these things then you’ve got it made. But I must add, and I hate to write this, if you can only afford to make the minimum credit card payment every month it will take you anywhere from 12 to 25 years to pay off your balance in full. And that is assuming that you’re not making any more charges and adding to your current debt.

Terry makes some other great points in her article including questioning, as we did on our last post, why on earth Congress did not make the Credit Card Accountability Responsibility and Disclosure Act go into effect immediately upon being signed into law by President Obama.

It is not scheduled to take effect until February of 2010. In the meantime that leaves credit card companies with a wide-open opportunity to gouge and claw every penny they possibly can from existing account holders that carry balances. And as we have seen, many credit card issuers are taking full advantage of it.

It has become pretty clear that our congressional leaders have made backdoor deals with the credit card companies that allows banks and financial institutions that issue credit cards this window of opportunity to raise revenue before the reform legislation goes into effect.

The funny thing of it is though, some members of Congress are actually acting surprised and are feigning contempt that the credit card companies would raise the interest rates charged to current balance holders in front of the new laws taking effect.

It is quite obvious that our congressional leaders are beholden financially to the credit card industry. And by leaving open this window of opportunity for the credit card companies to raise interest rates on cardholders and then feign disapproval is proof of that.

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