Analysis of Credit Card Debt Essay Example | Topics and Well Written Essays - 250 words

Analysis of Credit Card Debt - Essay Example How much of the minimum payment goes towards interest? How much of the minimum payment goes towards the principal? If you do not want to share an actual balance or do not have a credit card, calculate these amounts using an imaginary credit card balance. Now, examine the terms of one of your credit cards or other revolving debt. Are there other charges that the credit card company is applying to your account? Are you receiving a special rate for a limited time? Does your card charge an annual service charge or an inactivity fee? Examine a credit card bill (or other revolving debt) and see how long it will take to pay off your debt if you paid only the minimum payments (you can also use an online calculator like the one at http://www.bankrate.com/calculators/managing-debt/minimum-payment-calculator.aspx What steps could you take to pay off this credit card (or debt) sooner? Determine the percentage of the principal that you need to pay down in order to pay off the credit card in the time frame of your choosing. Many Americans find themselves amassing large amounts of credit card (or other revolving) debt at an early age. What advice concerning the use of credit cards and the fees they charge would you provide to a young adult planning on getting a credit card? One needs to understand the fundamentals of the above calculation method. The credit card debt is revolving debt. Minimum monthly payment will not reduce it to zero. It means that one will be paying interest on interest. An example: $29.50. In month 2 interests were calculated on this amount. Interest will be calculated on the same amount in month 3. This is called revolving debt. It happens when the debt is not paid in full. Credit card debt is revolving