Minimum Payments: The Debt Trap Hiding in Plain Sight
When you’re juggling multiple credit cards, it’s tempting to stick with the minimum payments. After all, it keeps the creditors happy… for now. But what many people don’t realise is that minimum payments are designed to keep you in debt for as long as possible — and make lenders a fortune in interest.
Let’s break it down.
The Real Cost of Minimum Payments
Imagine you have £10,000 in credit card debt with an interest rate of 21.9% APR, and you only pay the minimum each month (say 3%).
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Starting balance: £10,000
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Monthly minimum payment (3%): £300 initially
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Time to pay off: Over 28 years
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Total interest paid: £13,000+
Yes, you read that right — you’d pay more in interest than the original debt. And for nearly three decades, your money would be tied up instead of going towards your goals.
Why It Happens
Minimum payments shrink as your balance drops, which slows down your debt repayment even more. It’s like walking down an escalator going the wrong way — you’re moving, but you’re not really getting anywhere.
How Remortgaging Can Break the Cycle
Now let’s compare that with using a remortgage to consolidate your credit card debt.
Suppose you have equity in your home and qualify to add £10,000 to your mortgage at a much lower rate — say 4.5% APR over 10 years.
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New monthly payment: ~£104/month
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Total interest over 10 years: ~£2,500
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Time to pay off: 10 years or less
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Total saved vs minimum payments: £10,000+
That’s a clear, structured path to becoming debt-free, often with a significantly lower monthly cost. And you can always overpay to clear it faster.
Simple Comparison Table
| Method | Interest Rate | Monthly Payment | Time to Repay | Total Interest |
|---|---|---|---|---|
| Credit Card (Min Pay) | 21.9% | Varies (~£300) | 28+ years | £13,000+ |
| Remortgage (10 years) | 4.5% | ~£104 | 10 years | ~£2,500 |
Things to Keep in Mind
While remortgaging is a powerful option, it’s not a magic wand. You should:
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Have enough equity in your home
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Avoid racking up new card debt after consolidating
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Understand the total cost if spreading payments over a long time
It’s about using your mortgage strategically to regain control, not just reshuffling the debt.
Take the First Step Towards Freedom
If you’re making minimum payments on your cards and feeling stuck, it might be time to explore your options. Speak to a qualified mortgage adviser who can help you work out if debt consolidation through remortgaging is right for you.
It’s not just about simplifying your finances — it could save you thousands and give you a clear route out of debt.
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