I know. You are in the midst of shopping for Christmas presents. You have a list of people who expect to get a gift from you. You only have 13 shopping days left until Christmas! Feeling stressed yet?
Can I bother you to ask whether you are even paying attention to how much you are spending on Christmas. Or do you say what many others say, “I will worry about that next month.”
Don’t do it!
Here is what will happen if you charge all of your Christmas presents on a credit card with the current average interest rate and you pay only the minimum payment each month:
How much will you spend on Christmas presents this year?
Shoppers around the country say they are planning to spend an average of $861 for gifts this holiday season, up from $801 last year according to the 30th annual survey on holiday spending from the American Research Group, Inc. Planned gift spending will slightly exceed spending in 2007, a first since the recession. (according to American Research Group, Inc)
What is the interest rate on the credit card you will use?
The average annual percentage rate, or APR, for fixed-rate credit cards stayed at 13.02 percent, while the APR for variable-rate credit cards stayed at 15.7 percent. (12/4 Bankrate.com)
What is the minimum required payment on your credit card?
Each credit card issuer uses a slightly different formula, but, as a result of new federal guidelines, most credit card companies now require you pay at least 4 percent per month. (Lendingtree.com)
How long will it take you to pay off your Christmas presents if you just pay the minimum payment each month?
56 months! You can go to Bankrate.com and use the calculator to get this chart.
| Month | Minimum Payment |
Interest Paid |
Principal Paid |
Remaining Balance |
| 1 | $32.64 | $8.84 | $23.80 | $792.20 |
| 2 | $31.69 | $8.58 | $23.11 | $769.09 |
| 3 | $30.76 | $8.33 | $22.43 | $746.66 |
| 4 | $29.87 | $8.09 | $21.78 | $724.88 |
| 5 | $29.00 | $7.85 | $21.15 | $703.73 |
| 6 | $28.15 | $7.62 | $20.53 | $683.20 |
| 7 | $27.33 | $7.40 | $19.93 | $663.27 |
| 8 | $26.53 | $7.19 | $19.34 | $643.93 |
| 9 | $25.76 | $6.98 | $18.78 | $625.15 |
| 10 | $25.01 | $6.77 | $18.24 | $606.91 |
| 11 | $24.28 | $6.57 | $17.71 | $589.20 |
| 12 | $23.57 | $6.38 | $17.19 | $572.01 |
| 13 | $22.88 | $6.20 | $16.68 | $555.33 |
| 14 | $22.21 | $6.02 | $16.19 | $539.14 |
| 15 | $21.57 | $5.84 | $15.73 | $523.41 |
| 16 | $20.94 | $5.67 | $15.27 | $508.14 |
| 17 | $20.33 | $5.50 | $14.83 | $493.31 |
| 18 | $19.73 | $5.34 | $14.39 | $478.92 |
| 19 | $19.16 | $5.19 | $13.97 | $464.95 |
| 20 | $18.60 | $5.04 | $13.56 | $451.39 |
| 21 | $18.06 | $4.89 | $13.17 | $438.22 |
| 22 | $17.53 | $4.75 | $12.78 | $425.44 |
| 23 | $17.02 | $4.61 | $12.41 | $413.03 |
| 24 | $16.52 | $4.47 | $12.05 | $400.98 |
| 25 | $16.04 | $4.34 | $11.70 | $389.28 |
| 26 | $15.57 | $4.22 | $11.35 | $377.93 |
| 27 | $15.12 | $4.09 | $11.03 | $366.90 |
| 28 | $15.00 | $3.97 | $10.71 | $355.87 |
| 29 | $15.00 | $3.86 | $10.37 | $344.73 |
| 30 | $15.00 | $3.73 | $10.06 | $333.46 |
| 31 | $15.00 | $3.61 | $9.73 | $322.07 |
| 32 | $15.00 | $3.49 | $9.39 | $310.56 |
| 33 | $15.00 | $3.36 | $9.06 | $298.92 |
| 34 | $15.00 | $3.24 | $8.72 | $287.16 |
| 35 | $15.00 | $3.11 | $8.38 | $275.27 |
| 36 | $15.00 | $2.98 | $8.03 | $263.25 |
| 37 | $15.00 | $2.85 | $7.68 | $251.10 |
| 38 | $15.00 | $2.72 | $7.32 | $238.82 |
| 39 | $15.00 | $2.59 | $6.96 | $226.41 |
| 40 | $15.00 | $2.45 | $6.61 | $213.86 |
| 41 | $15.00 | $2.32 | $6.23 | $201.18 |
| 42 | $15.00 | $2.18 | $5.87 | $188.36 |
| 43 | $15.00 | $2.04 | $5.49 | $175.40 |
| 44 | $15.00 | $1.90 | $5.12 | $162.30 |
| 45 | $15.00 | $1.76 | $4.73 | $149.06 |
| 46 | $15.00 | $1.61 | $4.35 | $135.67 |
| 47 | $15.00 | $1.47 | $3.96 | $122.14 |
| 48 | $15.00 | $1.32 | $3.57 | $108.46 |
| 49 | $15.00 | $1.17 | $3.17 | $94.63 |
| 50 | $15.00 | $1.03 | $2.76 | $80.66 |
| 51 | $15.00 | $0.87 | $2.36 | $66.53 |
| 52 | $15.00 | $0.72 | $1.94 | $52.25 |
| 53 | $15.00 | $0.57 | $1.52 | $37.82 |
| 54 | $15.00 | $0.41 | $1.10 | $23.23 |
| 55 | $15.00 | $0.25 | $0.68 | $8.48 |
| 56 | $8.57 | $0.09 | $0.25 | $0.00 |
Not only will it take nearly five years to pay off this year’s Christmas, you will have added over $200 in interest. I wonder how many will remember what you gave them five years ago? And what happens if you repeat this same behavior over the next four years compounding the debt?
Why not choose to do things a little differently this year and pay only cash for your gifts or buy only what you can pay off immediately?
Living with consumer debt is not normal regardless of what your uncle or the media or your neighbors say. When you make the choice to live without debt, giving becomes more a way of life instead of a “have to” at Christmas time. Instead of paying credit card companies interest, you can give that money away to those who really need it.
You are 1000% correct. If one takes on personal credit card interest debt, it’s like throwing money down the toilet. The only ones to profit are the “money changers”. I agree with you; that is money which might be shared much more wisely.