Think that flat-screen television you are buying as a gift for this holiday is a steal at $750? It won't be if you purchase it with a high-interest credit card and then only pay the minimum amount due on your credit card.
A new consumer Web site says such a purchase will take nearly 12 years to pay off and, in doing so you will have shelled out interest payments totaling almost $900 -- well over 100 percent more than the original purchase price.
The "True Cost of Holiday Shopping" Web site, sponsored by AmeriDebt, provides a calculator that allows visitors to plug in the cost of their total holiday purchases on a credit card, enter the card's interest rate and then see how long it will take them to pay off purchases, assuming a $10 monthly minimum requirement.
"If this Web site shows anything, it is that the real Grinch that consumers need to look out for at Christmas is the high-interest credit card in their wallet or purse," said Zynda Sellers, in-house counsel at AmeriDebt.
Consider the case of a consumer who buys $1,200 worth of gifts on a card with a 21 percent rate of interest. By only paying the minimum amount every month, the consumer would still be paying for Christmas 2003 during the year 2025.
"If you do use a credit card for holiday gifts, the best advice is to pay off the balance in January," Sellers said. "If you can't afford to do that, make double or triple payments and get the balance down to nothing or as low as possible in a year or less."
She said consumers should also shop for the best available credit-card interest rate for which they qualify.
"Too many American consumers allow themselves to be victimized by needlessly high interest rates," she said.
Distributed by Internet Broadcasting Systems, Inc. This material may not be published, broadcast, rewritten or redistributed.
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