Leveraging the Credit Card Minimum Monthly Payment

When it comes to credit card debt, most individuals drowning in debt agree; the struggle is in paying more than the minimum monthly payment due. Credit Card Issuers generally set this minimum at a fraction of the remaining outstanding balance, and generally between (2-3 percent). While this practice has been criticized by consumer advocates and the government alike, it's actually a mixed blessing. Hard-pressed individuals such as those who are on a fixed income such as retirees, who may have inherited some college debt from their children or even grand children perhaps, may not be in a position to fork up more than this low monthly minimum due. If this minimum payment requirement were to suddenly increase, it might serve to push these folks– right over the edge.

Conversely, for some individuals, this low minimum often provides the temptation leading to a charging frenzy. After all, why not charge an extra thousand or so to buy that new television figuring it might only require an additional payment of just ($20 bucks) a month? But more importantly, just paying the minimum due each month could keep the debt around for more than twenty years.

Based on consensus of opinion, and as gleaned from almost every article and book ever written about paying down credit card debt, the minimum monthly payment is at the core of the dilemma. So, let's look at a fresh and new approach in using the minimum due as the basis for turning things around. Based on the recently published book; "Fighting Fire With Fire-Charging Your Way Out Of Credit Card Debt," a new methodology is outlined defying conventional wisdom as it relates to mitigating credit card debt. Under this "Jump-Start Plan," an unorthodox strategy suggests making focused but disciplined charges in the same amount as the minimum payment due–for each credit card.

While this approach might seem somewhat radical, it certainly merits the consideration of those who have tried and failed at other approaches and are now possibly even in a (post bankruptcy state), left with no real alternatives. By charging an amount equal to a minimum payment due while also paying that same amount that month, the individual is now in lockstep with the debt. In essence, by making a $40 charge for gasoline for example, and then also paying the same amount in the form of the minimum due, the noted benefit is this; by charging, it allowed for the cash that would have normally been used in making this purchase, to be set aside and later used in a sum to pay down the debt. The finance charges that build up within the debt continue to build-up until the entire debt is paid off. So in effect, the small amount of interest attributable to this new charge is irrelevant. This strategy as designed, ensures an overall (rapid payoff-time-frame), negating any slight monthly increases in finance charges.

By setting aside the equivalent amount of cash for all the minimums under this strategy, there will be a "chunk" of money available at the end of the month that can be used to pay down the credit card that is charging the highest interest or (APR). For disciplined individuals who will follow the plan as outlined, they will now be in a position to pay down their credit cards in a more rapid succession. For example, under the plan, it would be possible to terminate the debt on the first card within a year or so, on average. Without utilizing the plan, paying just the minimum due would certainly take many more years to eliminate the debt. The simple magic in this approach is based on (minimal charging) coupled with rearranging how payments are made without the necessity of taking on additional loans. Since many lenders are now becoming reluctant to agree to a customer's repetitive request for lower rates and superior terms, charging your way out of credit card debt may now be a more likely alternative to talking your way out. The merits of this plan can be further investigated at (www.chargeyourwayout.com).

 

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