Leave €1,000 on a card or shop credit at 19% a year and pay nothing: after 4 years you owe about €2,000.
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Compounding works for whoever is owed. On a debt, the interest is added to what you owe, and next month the interest is charged on that too.
The interest on €1,000 at 19% is about €16 a month. Pay €16 and you still owe €1,000 in 4 years. Pay €50 and it’s gone in about 2 years.
A small minimum payment feels safe. On €1,000 at 19%, a €25 payment is mostly interest: only about €9 of it pays the debt down.
Every loan and card statement shows its yearly rate. Paying off a 19% debt is like earning 19% on that money, with no risk.
Debt compounds against you. At 19%, €1,000 left alone doubles in 4 years.
Do it today
List your debts by rate, highest first.
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