RateCity has crunched the numbers on the money and time it would cost you to repay a $10,000 credit card debt with a 15% interest rate with minimum repayments versus larger, ongoing repayments
Credit card repayment comparison
| Repayments | Total paid | Time taken to pay off debt |
Credit card A | $203 in the first month, decreasing as debt reduces. | $25,095 | 31 years, 3 months |
Credit card B | $479 each month | $11,493 | 2 years |
Difference | / | $13,602 | 29 years |
Source: ASIC Credit Card Repayment Calculator. Note: Hypothetical example for demonstrative purposes of $10,000 credit card debt with 15% interest rate where customer makes minimum repayments versus higher ongoing monthly repayments.
As you can see, while making minimum repayments on your credit card debt may seem more convenient, you’re actually adding decades and thousands of dollars in interest to your original debt. Making only the minimum repayments on a credit card can hurt you in the long run in terms of ongoing interest charges.
In some instances, you could end up paying off a credit card as long as it could take to pay off a mortgage.