Minimum payments and the cost of credit

When you have a credit card, every month you have to pay what’s called the minimum payment; and the bank will tell you how much it is. The minimum is the least amount of money you can pay to keep your credit card account in good standing.

But paying the minimum isn’t as good as it sounds.

Check out the real cost of these video games if you pay only the minimum.

Real cost of $100 video games*

Minimum payment: $5.00

Monthly payment $5 $10 $15 $20 $25
Months to repay 20 10 7 5 4
Total interest paid $19.07 $9.03 $6.14 $4.68 $3.86
Cost of video games $119.07 $109.03 $106.14 $104.68 $103.86

* 18% credit card interest per year

You see? The slower you pay the money back, the more interest you’ll have to pay every month, on every cent that you haven’t repaid.
Ouch! You’ll end up paying more for the video games than if you’d bought them with cash!

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