This is an article that I read a couple years ago. What’s interesting is that the numbers they point out are actually worse now. I noticed that they had the savings rate at about 2% in 2004. Now it’s a negative number. I believe that people’s debt load might have increased too. Anyway, check out the article. It’s great!!
http://www.csmonitor.com/2004/0816/p14s01-wmgn.html
Here’s a paragraph from the article:
“Those who get by just paying the minimum monthly charge may not have noticed that the typical minimum has been lowered in recent years from 5 percent to just 2 or 3 percent, according to De-mos, a research and advocacy group in New York. With an interest rate of 15 percent, it calculates that it would take 32 years to pay off $5,000 by making only 2 percent minimum payments. It also warns about bigger late fees: Revenue to credit-card companies from late fees jumped from $1.7 billion in 1996 to $7.3 billion in 2001.”
32 YEARS to pay off $5k. I bet none of the people making these minimum payments realize how long they’ll be paying that off. Imagine how much more money they’d have if they had just paid cash for the things they bought.