The Minimum Payment Trap Part 2

Hi,
Yesterday, I discussed the simple version of the minimum payment trap. Today I'm going to discuss a more complicated and common minimum payment trap. This is how a more complex version of the minimum payment trap unfolds:
A relatively new cardholder uses his or her card for a couple of years and pays off the balance faithfully every month. At the end of two years, the cardholder's credit limit has been quadrupled. In addition, he or she has received numerous additional solicitations to obtain other money cards from different banks. Two and a half years into activating the first card, the cardholder has an emergency that requires him or her to use most of the credit limit on the card. He or she does not have the financial resources to pay it off at the end of the month, as he or she has been doing for the previous thirty months. When the bill arrives, he or she does the right thing, and pays every available dollar on the credit card, but still leaves a substantial balance. The following month, the cardholder's car breaks down. The card holder needs to max out the credit card to get the car fixed. Once again, when the bill arrives, the cardholder does the honorable thing and sends every dollar he or she can to reduce the balance, however a substantial balance remains. The next month, the card holder gets laid off from his or her job. Due to the amount of money put on the credit cards over the last two months, his or her savings have been almost wiped out. When the next bill arrives, the card holder succumbs to the infamous box in bold letters saying "minimum payment due" because he or she needs all the cash on hand. Over the next two months, the cardholder realizes that gainful employment is not coming as soon as he or she expected. During this time, the cardholder is still receiving solicitations for more credit, and due to his or her need for immediate cash, takes advantage of the offers. I will continue "part 2"
tomorrow.
Until then,
Alan