While credit cards are useful, many of us run up a large unpaid credit card debt balance on their charge card accounts and continue to make sizable interest payments. The credit card companies make this easy by asking that you make only the minimum monthly payment, which is far less than the unpaid balance.
This much smaller payment we usually cover less than the interest charges of the previous month. This minimum payment cycle ensures the credit card companies that it will take you a long time to pay off the debt, and gives the credit card companies a hefty return in interest.
Essentially, you have to try to avoid carrying a big balance on your credit cards. But if you do end up carrying a big balance, make it a priority to pay it off as soon as possible. If you have multiple credit card debts, try paying the minimum on the cards with the lowest interest rate first, and allocate most of your debt payment funds towards the cards with the highest rates.
Credit Card Debt Statistics
Studies today show that 35 million Americans pay only the minimum payment on their credit card debt. At this rate, consumers will take over 48 years to finally pay off the debt.
The average interest rate in the USA on major credit cards is currently 13.4%. The average household in the US owns 7 credit cards. On the median, the average balance is approximately $9,300.00.
At the current interest rate, and the current debt load, in the 48 years needed to pay off a credit card bill of the average American household, you can expect to pay over $21,000 in interest!
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