Minimum Payments are for Suckers - Start a New Chapter Consulting (2024)

Americans have a love/hate relationship with credit cards, and about 50% of people use them as their only safety net. The problem is that one in five people don’t make regular payments on their cards and nearly 50% only opt to pay the minimum payments.

This is a terrible strategy and one that is likely to keep you in permanent debt to the credit card companies. That doesn’t sound like fun, does it? I’ll say it again, making minimum payments on credit cards is for suckers. And I’m guessing you’re not a sucker!

How are Credit Card Minimum Payments Calculated?

Let’s think about it – who determines the amount of the minimum payments? The credit card companies do, and believe me, they are very carefully calculated to keep you in debt for as long as humanly possible while also getting the maximum amount of cash out of your pocket in the form of ridiculously high interest rates.

I always like to visualize a bunch of stuffy rich white guys in thousand dollar suits having a meeting to calculate the minimum payments on credit cards. Jerks. They obviously do not have our welfare at heart, and in fact, their only goal is to maximize their Corporate profits. I don’t want to do ANYTHING to make these guys happy, do you?

So, if you are only paying the minimum payments on credit card debt every month, you are playing right into their hands. If you’ve noticed, they even put disclaimers on each statement clarifying the interest rate, and how long it will take you to pay off the balance if you only pay the minimum payment. They do that because the government forces them to, but no one really pays much attention to that info.

So How to Figure Out Your Payment on a Credit Card?

So, how to outsmart them? It’s simple. NEVER pay the minimum payment. Why would you, when it’s completely rigged against you? Only use it as a guideline to make sure you never pay LESS than the minimum payment.

I use something I call a “double minimum strategy”. Like most people, I have two paydays per month, so I pay the minimum payment on my credit cards on the first payday, then I pay it AGAIN on my second payday.

This is helpful because I’m not just paying my debts down 50% faster, its actually doing much better than that because the interest charge is only taken out of the first payment. The second payment goes 100% towards my balance. Smart!

Avoid Late Fees on Your Credit Cards

Also, I’ll never have a late fee because I’m constantly throwing money at them.

Granted, it would be smarter to pay your credit cards in full every month, but that’s not always possible. So, you want to do the next best thing and get your debt paid off as fast as you humanly can. Here are some strategies that might help:

1. Set up automatic payments each month to get your bills paid on time.
2. Try to avoid using your credit card and use cash or debit cards instead.
3. If you have multiple credit cards, consider consolidating them into one lower-rate card.
4. Stop applying for new credit cards. You’re smarter to manage your spending than get deeper in debt.
5. Consider bringing in new sources of income from a side hustle or overtime pay. Also cut back on your spending habits to free up cash to attack your debt aggressively.
6. Consider negotiating with your credit card company for a lower interest rate. It does work sometimes, especially if you’ve been making regular on-time payments.
7. Look into setting up a debt snowball strategy to organize your debt payments. You could save thousands of dollars in interest fees if your debt is especially large.

How to Pay Your Credit Card Debt Off Quickly

Tackling debt can be daunting, but it doesn’t have to be. With some discipline and organization, you can pay off your debt quickly. That’s why I created my Debt-free Coaching Program to help folks who are struggling with immense debt. I’ve helped hundreds of people with these methods and I can help you too. Click the image to check it out.

Here are some additional tips to help you get started:

• Make a Budget: A budget is a great way to keep track of your spending and make sure you’re paying off debt as quickly as possible.
• Look at Your Food Costs. One consistent issue I’ve discovered in the people I’ve worked with is that their fast food expenses are way out of proportion. Sometimes it’s their largest expense after their mortgage. Doordash and other food delivery services are a luxury, not a necessity. Same with Starbucks and lots of eating out. Yes, eating at home can get boring, but it’s cheaper and healthier by far.
• Start a consistent savings plan. A full 40% of Americans have less than $300 in a savings account. That is just CRAZY. When the car breaks down, or the basem*nt floods, or a medical emergency comes up, that savings account should be the first place you turn rather than a credit card.
• Start a Side Hustle: I am the queen of the side hustle. I’ve had some type of side hustle or other since the 80’s. Some more successful than others, but I was always trying, mainly because it annoyed me to wait for payday to buy things. My friend Cat from New Zealand has a great book on starting a side hustle in midlife.
• Make Your Progress Visible: One way to keep your morale up is to make it visible. There are lots of fun graphics on Etsy or elsewhere to help you track your progress. My friend Jess over at Purse Coach made a wall chart and let her kids color in a section every time they paid off $1,000 of their debt. It’s a great way to get the whole family on board.
• Think About Joining a Program: Obviously, I’d prefer you chose my program, but if you decide it’s not for you, you might look into something like Dave Ramsey’s Financial Peace University. We have a site license for it at my church and people can join for as little as $25. Check around and see if it’s available in your area.
• Read Some Books or Listen to Podcasts: I’m a huge believer in learning from the wisdom of others. I’m not a big podcast girl, but I read like a house afire. Two of the most helpful books for me have been James Clear’s Atomic Habits and Influencer – The Power to Change Anything. Also The Secret. I’ve read all of them multiple times and they’ve been a huge help to me in my debt-free journey.

With some dedication and the right plan, you can pay off your debt quickly and get back on track financially. Good luck!

Other Resources for You to Look Into

Check out my freebie page. I have a video that will show you exactly how to pay off $500 worth of debt within 30 days with some easy tweaks. I also have a handy guide to help you control your impulse spending on Amazon, Target, and other places where you frequently overspend.

Check out my debt-free coaching page. I've helped hundreds of people save thousands of dollars in excess interest charges using simple Dave Ramsey-like strategies. It's simple, affordable and personalized to your unique financial situation.