Anchoring to the minimum payment

The psychological trick that makes it harder to pay off your credit cards

Unlike your typical mortgage or car loan, credit cards are a door to open-ended debt. There exist no standard repayment plans, no deadlines to keep you on track. Beyond a token minimum each month, you’re free to mail in as much or as little money as you like. It turns out that the human mind is terrible at dealing with all that flexibility. Only a quarter to a third of credit-card users pay off their bills in full every month. Most Americans carry a balance, and as new research shows, a surprising number of them pay close to the minimum each month — even when it’s clear that they could easily settle their debt faster and save a ton of money in interest payments. ….[READ]