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First, a big thank you to spl241 and the other members of this board for bringing this to my attention.

Last night, I confronted friend of mine after reading spl241's post. I knew she'd charged summer school and plane tickets on two credit cards, and was paying the minimum payment of $50/month for each card. I didn't know until last night that her combined balance is in the neighborhood of $3500! I calculated (correctly?) it would take about 5 years at 100/month to pay this off, if her interest was about 20% compounded. I thought she was going to faint.

Are my calculations reasonable? (using 20%interest) For example, month 1 = $3400-100=3300+14.1=next month's total of $3314.

Month 2=3314-100=3214+13.8=$3227

Month 3=3227-100=3127+13.4=$3140

So I'm guessing she's paying about $13/month in interest, with that number going down 40 cents or so every month

I guess my numbers don't exactly add up after all, because it would take 40 months at 87/month to pay off $3500, not to mention that the interest payments should go lower as her balance does. Is there a simplified algorithm I can use?

In any case, since she doesn't have the means to send any more than an extra $50/month on top of her combined $100/monthly payment, thus totalling $150/month, what can she do?

Also, does the 20% interest go down to a lower rate as her balance decreases?

Thanks for your help.


P.S. - She looked horrified when I suggested taking scissors to her credit cards.
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