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Minimum Monthly Payments = Megabucks for Banks

September 21, 2009

A new article in the New York Times looks into the psychology behind credit card statements that require minimum monthly payments, and the effect this has on consumers.

You can read the whole article here, but the bottom line is that people pay less when monthly minimums are required, which results in more cash for your credit card company as interest accrues and the owed balance diminishes slowly.  You get to hold onto your cash a little longer, but end up losing out in the end.  Your best bet, as usual, is to pay off your debts as quickly as possible in order to avoid giving credit card companies more money than absolutely necessary.

(Photo: ohadweb)

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