What Everybody Ought to Know About Credit Card Debt



“The only thing more expensive than education is ignorance.”- Benjamin Franklin

Benjamin Franklin was on to something. Not knowing things will hurt you. And by knowing the credit card debt facts, it will help you to better understand your debt and what to do about it.

Fact: Interest Rates can Change

Interest rates are not carved in stone. While you may have a small interest rate now, that interest rate could jump if your creditor decides to. While laws are being passed to change the rules you should still be wary and prepare for interest rate jumps. By religiously paying down your debt and on time, you can prevent these interest rate changes.

Fact: Minimum Payments are NOT Enough

The average Joe believes that the minimum payments that they are making will be enough to pay down their cards debt balance in a reasonable time. That's not the case. They do not understand that on many of their credit cards, the interest charges per month can be larger than the minimum payments. Use a calculator found through a Google search "pay down calculator," and you'll see that in this example minimum payments are not enough to make a dent on your credit card debt:

Enter your credit card balance: 3,000

Enter the credit card's interest rate: 15%

Enter payment amount per month: $60.00

It will take you 78 MONTHS! to pay off your credit card if you just pay minimum.

And realize that most interest rates are in the high 20's.

Fact: Debt Continues to Rise

When people are handling with debt, they are inclined to get into more debt. People will frequently acquire new credit cards to help pay off their old ones. In time, they neglect to realize that they've dug themselves into a deeper hole. Generally, credit card debt is rises by at least 1% per year. Debt is also rising on the personal level. As a nation, America has almost $1 Trillion and (probably more as you read this) in credit card debt. Banks have the license to steal money from the pockets of credit card holder with these high interest rates and deceptive payment structure.

Debt keeps on rising for individuals and as a collective nation. If you can, stay away from new debt as you work to defeat your current debt. By being aware of these facts, you're smarter and can decide the best possible choice.