“Interest never sleeps nor sickens nor dies. Once in debt, interest is
your companion every minute of the day and night; you cannot shun
it or slip away from it; you cannot dismiss it; it yields neither to entreaties,
demands, or orders; and whenever you get in its way or cross its
course or fail to meet its demands, it crushes you.”
— J. Rueben Clark Jr.
What happens when we let interest expense silently multiply?
Situation:
• Amount owed on a credit card is Rs 3,100.
• The card company charges an interest rate of 19.9%.
• Cardholder only pays the minimum monthly payment of
Rs 51.43.
Question #1: How long will it take to pay off the card?
Answer: 39.4 years!
Question #2: How much principle will be paid on the above debt in
the first year?
Answer: Rs0.29!
Question #3: How much interest will be required to pay the card
off?
Answer: Rs 21,216.10!