Pay more than the minimum payment on your credit cards

The worst thing you could do with your credit cards is to pay the minimum payment every month. OK, we all know times are hard sometimes and if you have to pay the minimum payment one month then go on right ahead but to make the minimum payment every single month will really cost you big time in the long run. Some credit card companies even report if you paid the minimum payment or more. Take a look at the sample below to see how much paying these minimum payments can cost you.

A handful of credit card issuers have raised minimum payments from 2% to 4% of the balance due. If you can afford these higher payments each month, you'll benefit over the long haul. If you can't afford this increase, chances are you're in over your head. Ask someone at your credit union for help in straightening out your finances.

Consider the example of a $2,000 balance at 18% interest. If your minimum payment is 2% of the balance due each month, it will take you about 19 years to pay it off and you'll pay $3,862 in interest. (A 2% minimum payment would start at $40 and taper to $20. Maintain the $40 and you'll pay off the debt faster. That's what our calculator assumes.)

If you're paying 4% of the balance due, you'll pay off the balance in seven years and four months and cut your interest costs to $1,031. (A 4% minimum payment starts at $80 and tapers to $20.)

By paying 8% of the balance due, much more than the minimum, it will take you three years and nine months to pay off, and you'll pay about $433 in interest. (An 8% minimum payment starts at $160 and tapers to $20.) Remember, these calculations assume you add no more charges to the card.

Always pay the minimum amount due so you don't incur a late fee, and if possible, pay more than the minimum.