How Long to Pay Off Balance With Minimum Payments

If you only make the minimum payment on your credit card, it could take years to pay off the balance. Not even that, you could end up spending hundreds, possibly even thousands, in interest by the time the balance is repaid.

How Minimum Payments are Calculated

Typically, minimum payments are calculated as a percentage (something like 1-3%) of your credit card balance. Late fees and over-the-limit fees can increase your minimum payment beyond the base percentage of your balance. Your credit card agreement will describe how your minimum payment is calculated.

Even though it seems like minimum payments are easier to make, they actually cost more in the long run.

Minimum Payment, Maximum Cost

Consider having a balance of $5,000, at 14% APR, and minimum payment as 2% of your credit card balance. Making minimum payments only, it would take you 22 years and $5,887 in interest payments to pay off this debt.

Increasing your payments to $125 a month would allow you to pay off the same debt in less than 6 years and spend only $1,775 in interest.

Not only does increasing your payments allow you to pay off the balance sooner, you also save money in interest.

Calculate Your Minimum Payment Timeline

To see the pay off time and cost of making minimum only credit card payments on your balances, you can use this minimum payment calculator from Credit.com. You might also use the pay off calculator to calculate your pay off time and cost when you make higher monthly payments.

Dollar Cost Averaging - Still a Good Idea?

When you dollar cost average (DCA), you invest a certain sum of money in a specific investment (or investments) on a pre-set schedule. For example, you might arrange to put $100 into mutual fund X on the first day of every month. The primary advantage of dollar cost averaging is that you will buy more shares when the price of the investment is low and fewer shares when it is comparably higher. You automatically use DCA when you sign up for your 401(k) plan.

So, when wouldn't DCA be a good idea?

Turns out, about two-thirds of the time. Since the stock market generally goes up (notwithstanding the nearly two years of current market pain), by waiting to invest a lump sum of money, you miss out on more of the long-term price appreciation. Still, if and when you have a lump sum to invest, you don't know if we're about to enter a period of time when you would be better off investing all at once (two-thirds of such situations) or doing so over several months or longer (one-third of similar occasions). Like everything else, using dollar cost averaging is a trade-off between risk and reward. What would you do? What do you actually do? What do you think about dollar cost averaging?

By Michael Rubin, About.com Guide to Retirement Planning

Insurance Report Card

Now that the school year has ended are you ready for those report cards? Not just students are graded, so are insurance companies.

They are called ratings. These ratings are administered by independent companies. They are sort of like a report card on various aspects of a company's financial strength.

Best's Insurance Reports is an example of a popular independent insurance rating company. Similar to a report card, the ratings range from A+ to a C.

Now that you know..have you checked your insurance company's grade yet? Need to know how? It's easy-just call your insurance agent or company and ask.

Finding More Money to Help You Pay Off Debt

When you're just trying to keep up with your minimum credit card payments each month it can be hard to think that you have extra money sitting around. Although you may not realize it, you're probably sitting on at least an additional $100 per month worth of money that could be used to get that debt paid off faster.

It may be hiding in the more traditional places such as investments or an old cash value life insurance policy, but even more likely is the money that is slowly being drained from your bank account every month. The silent money pit usually comes in the form of small monthly payments. A few dollars a month for a magazine subscription, a gym membership that is rarely used, or even that premium cable channel can really begin to add up. Find five ways to save $10 each month, and you have another $50 a month, or $600 a year to accelerate those credit card payments. This can result in a significant savings on interest, and even cut months or years off the repayment period. Learn more about how you can find extra money to help pay off your credit card debt.

12 Simple Ways to Save Money Today. Learn how.

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Financial Emergency! Tap the Roth?

With the unemployment rate rising practically weekly, many folks are facing real financial emergencies. An event such as a job loss is the perfect time to tap an emergency fund - money put aside for just such an unexpected occurrence. Unfortunately, many people still don't actually have emergency funds. As a result, such folks may consider tapping their Roth IRA money to get by while they look for new employment.

There are plenty of downsides to tapping your Roth IRA in an emergency, not the least of which is the permanent reduction in the future value of your retirement account. That said, a Roth IRA distribution may be the only option for some people. If the total you take out is less than the amount you had previously contributed, you won't owe any income tax or early distribution penalty. If you exceed your contribution total, the financial implications get ugly fast, so try your best to avoid going over that magic number.

Kobrin Ememo - Shrinking your life insurance premium

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New opportunities for consumers
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More generally, this news item illustrates a growing trend. Carriers that are seeking a competitive edge will choose one or several health areas in which recent medical advances now allow a more precise prognosis. This means their underwriters can more accurately assess an applicant's mortality risk.

For example, some carriers now utilize cognitive testing when underwriting applicants over age 70, to determine whether or not certain impairments inherent in that age group are manifest. Other carriers use specific blood tests to better appreciate the probability of a heart attack.

All of this translates into new opportunities for consumers. People with an impaired health risk may be able to reduce their costs, if they were previously saddled with high premiums. Likewise, people who could not even obtain coverage before, may be able now. A broker who specializes in impaired risks can direct you to the carrier that is right for you.