# How Paying Off Credit Card Debt Can Cost You

See Jane get a raise!

Jane’s raise nets her an additional \$1,000 per month. Go, Jane, go!

Jane is smart! She wants to use her raise to: 1) pay down credit card debt; 2) start emergency savings.

Now, Jane needs help. What is the best way to split that \$1,000 per month between paying down credit card debt and building up her emergency fund? We can help Jane! See us do the math!

First, Jane carries a \$10,000 debt balance on her card at 20% APR.

If she pays the minimum monthly payment of \$200 per month toward her debt, she can put \$800 per month into her emergency savings. Her \$10,000 credit card debt will then take nine years to pay off, and she’ll also pay \$11,680 in interest charges.

If Jane doubles her credit card payment to \$400 per month, she can put \$600 per month into her emergency savings. Now, it will take Jane two years and seven months to pay off the \$10,000, and she’ll pay \$3,044 in interest charges.

See Jane’s two payoff options in this nifty chart!

If you were Jane, based on what’s above, how would you split your extra \$1,000 across your credit card debt and emergency fund?