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Reil [10]
2 years ago
11

Why is it more difficult to get out of debt when only paying the minimum payment?

Business
1 answer:
Artyom0805 [142]2 years ago
7 0

When one keeps paying only the minimum amount, they will find getting out of debt harder because:

  • More interest will accrue on the balance left

When a person pays the minimum balance that they are supposed to pay on a loan, they will be leaving a larger portion of money to be paid back.

This amount will accumulate interest such that the debt will keep increasing because the interest needs to be paid back as well.

In order to get out of debt faster, it is recommended that you pay higher than the minimum because this would reduce the amount that interest is charged on which means that you would owe less interest.

In conclusion, paying the minimum balance leads to more interest accumulating which makes getting out of debt difficult.

<em>Find out more at brainly.com/question/13711677.</em>

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Since we're taking two mortgages for a total of $200,000 for 30 years, we can find the actual rate of the mortgage by finding the weighted average of the two rates. The weights in this case will be the proportion of loan taken at each rate

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4.15            0.80     4.15 * 0.80 = 3.32

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