II. Credit Card Payments
It is not uncommon to quickly get $2,000 in credit card debt, and continually be unable to pay it off. Suppose that all you pay is your interest payment. At 16% yearly interest (the average rate being charged by credit cards), find out your monthly interest payment.
Assume you pay this same monthly interest every single month. Then fill in the chart below.
Years Interest Payments Total
1
2
10
25
50
60
Thus it appears that by never paying off any of the $2,000 owned on the credit card, always paying interest of $26.67 per month, it will cost you almost $20,000 in interest after 60 years. But there is also another way to look at this.