See the true cost of your credit card debt and how to escape the minimum payment trap.
Credit card companies set minimum payments low (typically 1-2% of the balance or $25, whichever is greater) because it maximizes the interest they earn from you. On a $5,000 balance at 22% APR, making only minimum payments takes over 30 years to pay off and costs more than $10,000 in total interest. You end up paying more than triple the original balance.
The single most effective strategy is paying a fixed amount above the minimum every month. Paying $200/month instead of minimums on a $5,000 balance at 22% saves over $7,500 in interest and pays it off in about 2.5 years instead of 30+. Even $50 extra per month makes a massive difference.
Many cards offer 0% APR balance transfer promotions for 12-21 months, typically with a 3-5% transfer fee. Transferring a $5,000 balance to a 0% card with a 3% fee ($150) saves thousands compared to paying 22% APR, as long as you pay off the balance before the promotional period ends. After the promo, rates typically jump to 20%+ retroactively on any remaining balance.
If you have multiple credit cards, the avalanche method (pay off highest APR first) saves the most money. The snowball method (pay off smallest balance first) provides faster psychological wins. Both are vastly better than making minimum payments on everything. The best method is whichever one keeps you consistent.