Jenny was an irresponsible high school senior who took a credit card and charged up her credit limit of $2,500 within the first month.
1. It will take Jenny approximately 15-20 years to reduce her balance by half. This is ridiculous because of the amount of interest that needs to be paid as well as the principal amount.
2. The last payment that Jenny will pay will be $10 because she paid such a small amount of money at a time to pay off her debt.
3. Jenny will end up paying a total of $9,983.63. Wow! That is almost four times the amount of money Jenny originally charged!
4. The amount of interest that Jenny pays will start becoming less than the principal she pays in the 45th year. That is a long time to start to be almost done paying off a small stupid debt!
5. Jenny will still owe $873.23 at her 25th high school reunion, which is probably much more money than everyone else she graduated with owes. She probably paid more than everyone else in credit card bills already too.
6. Jenny could have borrowed money from her parents to pay off the debt. She could have asked for a loan from a friend. Jenny could have paid off a little more at a time at each monthly payment. She could have worked another job on the side just to pay off her debt. Finally, Jenny could have had some of her paycheck deducted every month to reduce the payment amounts. If Jenny would've handled the situation differently, she wouldn't have as much debt and would have a higher credit score and not have spent as much money.
Know what's sad about this story? It's so common. As much as immaturity and irresponsiblity played a part for this particular girl, pushy credit card companies should definitely accept some of the blame. They know exactly what they're doing, and they'll happily take Jenny's money as long as they can.
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