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This program was made for the computer to simulate years of credit card use. Just what IS the
final outcome? This program runs out to fifty years with the assumption the credit card company
puts no restrictions upon you with a credit limit.
The most important person to watch here is the "Credit Card Man." He's the one who chooses
the minimum payment set by Discover Card. Note how quickly he gets mired down in debt!
The other person, "Payoff Man," pays each month's bill off in full. Payoff Man, thus avoids all
interest charges and, in fact, gets a yearly bonus with the "cash back" plan offered by Discover.
In short, Payoff Man gets more for his money ... to to tune of about $90 a year ... or $4,500 in
extra earnings.
In this rundown, the debt per month is set at $750.00. It assumes the Credit Card Man purchases
gas, food, and some other items amounting to this total and charges them to the credit card.
An important thing to watch is the "To pay off loan and monthly payment it will take" line. This
shows the amount one can expect to pay if he suddenly wakes up and decides to get out of debt.
If he does so, of course he STILL has the $750 a month to pay off. In addition, he also has the
"Total Debt" loan to pay off. If he chooses to pay this loan off over a 5 year period to Discover
Card, the "To pay off loan and monthly payment it will take" amount reflects his total costs to do
so. The shock is to look at that figure FIVE years down the road! !!
In this model, you will note, too that in July of year five that Mr. Credit Card Man's monthly
payments now exceeds Mr. Payoff Man's. Worse, Mr. Credit Card Man has a $36,299.77 debt to
pay off in addition! Suddenly, Mr. Credit Card Man meets with the reality of the credit card
whirlpool. For Mr. Credit Card Man to recover at this point, he must pay a total bill of $1,722.53
per month to recover from his folly.
Indeed, before one ever considers using a credit card, he should look at this rundown of
expenses. Or if he has already plunged into the credit card myth, he should wake up to the facts
immediately and take corrective action.
The complete printout can be seen at Fifty Years Rundown of Credit Card Expense. However on this page only the
mid years of the first, third, fifth, tenth, twentieth, fourtieth, and fiftieth year are reported. By the
way, by the fiftieth year, Mr. Credit Card Man has now paid out nearly a million dollars in
interest alone ($974,059.70)!
So, here we go ......
Year No. 1 - July ---------------------------
Credit Card Man: Payoff Man:
Payment/Month = $94.68 $750.00
Total Payments = $332.81 $5,250.00
Interest paid to date = $278.03 $0.00
Total Debt = $5,169.34 $0.00
Interest on Carry Over = $83.48
Money paid toward debt = $22.39
and toward interest = $87.79
To pay off loan and monthly payment it will take $905.46 per month.
Year No. 3 - July ---------------------------
Credit Card Man: Payoff Man:
Payment/Month = $448.77 $750.00
Total Payments = $7,120.13 $23,077.50
Interest paid to date = $5,523.99 $0.00
Total Debt = $21,696.98 $0.00
Interest on Carry Over = $350.37
Money paid toward debt = $107.76
and toward interest = $354.68
To pay off loan and monthly payment it will take $1,339.25 per month.
Year No. 5 - July ---------------------------
Credit Card Man: Payoff Man:
Payment/Month = $761.62 $750.00
Total Payments = $21,880.97 $40,897.50
Interest paid to date = $16,811.13 $0.00
Total Debt = $36,299.77 $0.00
Interest on Carry Over = $586.18
Money paid toward debt = $183.18
and toward interest = $590.49
To pay off loan and monthly payment it will take $1,722.53 per month.
Year No. 10 - July ---------------------------
Credit Card Man: Payoff Man:
Payment/Month = $1,393.00 $750.00
Total Payments = $87,819.52 $85,447.50
Interest paid to date = $67,028.65 $0.00
Total Debt = $65,769.96 $0.00
Interest on Carry Over = $1,062.07
Money paid toward debt = $335.40
and toward interest = $1,066.39
To pay off loan and monthly payment it will take $2,496.01 per month.
Year No. 20 - July ----------------------------
Credit Card Man: Payoff Man:
Payment/Month = $2,194.91 $750.00
Total Payments = $308,456.20 $174,547.50
Interest paid to date = $234,712.90 $0.00
Total Debt = $103,200.00 $0.00
Interest on Carry Over = $1,666.51
Money paid toward debt = $528.74
and toward interest = $1,670.82
To pay off loan and monthly payment it will take $3,478.42 per month.
Year No. 40 - July ---------------------------
Credit Card Man: Payoff Man:
Payment/Month = $2,857.07 $750.00
Total Payments = $931,095.30 $352,747.50
Interest paid to date = $707,494.40 $0.00
Total Debt = $134,107.10 $0.00
Interest on Carry Over = $2,165.61
Money paid toward debt = $688.38
and toward interest = $2,169.92
To pay off loan and monthly payment it will take $4,289.62 per month.
Year No. 50 - July ---------------------------
Credit Card Man: Payoff Man:
Payment/Month = $2,981.37 $750.00
Total Payments = $1,282,241.00 $441,847.50
Interest paid to date = $974,059.70 $0.00
Total Debt = $139,908.90 $0.00
Interest on Carry Over = $2,259.29
Money paid toward debt = $718.34
and toward interest = $2,263.61
To pay off loan and monthly payment it will take $4,441.89 per month.