Eliminate Debt

Finding yourself paying by credit card rather than cash? Feel like you’re only making the minimum payment on your balance and will never be able to pay it off? You’re not alone. According to an article in the February 2007 issue of Money, 24% of families with credit cards hardly ever pay their balances in full.

Are you one of the 24%? Don’t worry … Primerica can help.

If you’re only paying the minimum on your credit card debts each month, you may not be making any impact on the balance. The reason? Most credit card debt is considered “revolving” debt.

The REAL Cost of Credit

Most credit card debt is "revolving" debt. Because of the way the interest is calculated, it's difficult to tell how long it's going to take you to pay off the balance. The problem is that revolving debt is compounded when you add additional monthly charges to the balance. With installment loan debt, your payments are scheduled for a fixed amount payable over a specific period of time. You can easily tell when you will pay off the entire amount you borrowed and - even with a similar interest rate and monthly payment amount - your pay-off date will generally be much sooner than with a comparable revolving account.

This chart can help illustrate the difference:

* Assumes revolving payment (minimum) of 3.5% of the remaining balance or $20, whichever is greater. First month's payment is shown and term assumes continued payment of minimum amount. No additional debt incurred and payments decrease over time period.
** Assumes payment of 3.5% of initial loan amount, no additional debt incurred and payment amount remains fixed throughout term of loan. The amounts borrowed, amounts of interest paid and total costs illustrated above were rounded to the nearest $100. This illustration is hypothetical only. Each debt situation will vary.