Lesson 7
The Mechanics of Compound Debt
Follow one card balance month by month to see where each payment goes, why paying a little more helps so much, and why the minimum crawls.
Builds on
When interest joins the balance
A £10,000 card balance, £200 a month, no new spending. How long until it’s gone? The answer turns on something simple division leaves out. Each month the card charges interest on the balance, and any interest you haven’t paid off becomes part of the balance it charges next month.
This lesson follows that one card so you can see where each payment goes. If minimum payments or essential bills are already more than you can manage, get free debt advice now. You don’t need to finish the arithmetic first. (Source: MoneyHelper, Debt advice locator.)