# Analysis of Credit Card Debt

In 1946 the first bank card was introduced by a man name John Biggins from Brooklyn, NY. This card was called “Charge-it”. When the card was used for purchases the bill first when to the Biggins bank. The bank then gave the money back to the merchant and then received the payment from the customer. The only way to have a “Charge-it” card was you could only use the card locally and also had to have an account through Biggins Bank. Credit cards are good and can help you build credit for in the future if you want to get a loan for a house or car or other such items.

However, they can be bad because people tend to spend too much with them and then get in way over their heads with it and wind up paying a bill that takes those years to pay off or heavy interest rates that come with it each time you miss a payment or you are late paying it. With a credit card balance of 5,270. 00 and an (APR) of 15. 53% with no fees applied. If I was to take 5,270 x 15. 53% that will give me 818. 43 interest for the whole year. The maximum monthly payment would be 5,270. 00 + 818. 43 =6,088. 43. To get this balance I took the balance + total interest = total balance.

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Next to get the minimum monthly payment you take 6,088. 43/12 =508. 00 which is the minimum monthly payment I would have to pay each month. The amount of interest which is 818. 43 and the amount of less interest applied to reduce the principle which is 5,270. 00. You would take the amount of interest 818. 43 – 508. 00 minimum payment = 310. 43 which is the amount used to reduce the principle. Considering I had a credit card bill let’s say I had a balance of 705. 50, my minimum monthly amount would be determined by my payments, purchases, past due balances and also any interest charged.

The minimum credit card payment would 59. 00 with an (APR) of 18%. What would be applied to the principle would be 48. 42. The portion of the next payment that will go towards interest charges would be 10. 58. The total interest charges is 77. 93. If I was to pay this off like this it would take me 14 months to pay it off. . The terms on this credit card that the credit card company is applying to my account are Transfer fees, late payment fees and cash advance fee if cash with drawls exceed the principal balance.

I am not receiving any special rate or no annual service charge for inactivity fee for not using my card. What steps should I take to pay off my debt sooner? Credit card companies love when you pay just enough to get by each month so that they can add on the interest. So the first step so that I am not making only the minimum payment is making or paying more than the minimum payment. At this rate you can start seeing the bill become less. However if you are only making a minimum then you are really just paying on the interest. Step two is developing a payment plan or budget for myself.

This will help me to create a strategy that I can go by each month while at the same time budgeting my other expenses around my credit card payments. The final step that can help me to pay off my debt sooner is stop using my credit card and start using emergency money that I have put aside for things that I need. Once my credit card is paid off then I can use it for emergencies only keeping in mind to make payments right away to keep the interest down. My advice that I would give to a young adult planning to get a credit card would be don’t get them.

Credit card companies don’t what you to use them conscientiously they rather for you to rack up a large bill and then suck you dry until you have nothing left. They charge interest rates that are too high that the young adult maybe can’t afford. However credit cards can be good for emergency purposes only and they can be good for responsible young adults and if a young adult wants to get a credit card I suggest a credit limit of \$500 to \$1000 that way they can’t get into more trouble that way. Although credit cards have their ups and downs they can be helpful to many people that actually need them.

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