Why is my credit card debt not being reduced?

On Behalf of | Jun 29, 2010 | Bankruptcy |

You pay your credit card bills every month, so why in the world is the balance not going down?

The interest rate.
Let’s take “Bill” as an example.  Bill has 4 credit cards.  He owes them a combined total of $30,000.  Bill pays them $700 a month almost religiously.  Well, he went to visit his mother in Kansas because she was having a couple of problems.  When he got back to his place in Plano, he had to catch up on some overdue projects at work.  Then Bill’s dog had to get to the vet, and he had to get to the grocery store to restock the fridge from being in Kansas for a week.  The tires needed replacing, and he just could not get around to paying the bills that were stacking up on the kitchen cabinet since he took off for Kansas until the end of the week.
Bill was exhausted, but he sat down and started writing checks to send off to pay his various monthly expenses.  He was disgusted because he realized the due date for his American Express minimum payment was the day before.
A month goes by, and he was further disgusted because since he was 1 day late on that one  credit card, suddenly all of his credit cards jacked his interest rate up to an average of 25%.
Bill’s minimum payments were $700 a month, and that is all he could really afford in addition to keeping up with his mortgage payment, utilities, eating, etc.  
Nutshell:  At 25% interest, that $30,000 in credit card debt cost Bill $625 a month in interest.  Bill sent his hard earned $700 a month in to the credit cards, and that $30,000 was reduced by a grand total of $75 a month.
Bill needs to seek the advice of an experienced bankruptcy attorney or Bill will never retire…ever.