Did you know the average household credit card debt in America is $15,950 for families with credit cards. The average individual carries $4,717 in debt. And the average interest rate consumers pay on these cards is about 15%.
As Time reports, “At the minimum payment of $189, it’ll take 10 years and a month to pay off that $4,717. The total payments would amount to $22,869. That’s a $18,155 cost for a very small loan.”
Credit card debt is absolutely sucking the life out of Americans financial lives.
It’s no wonder so many people are finding it hard to get ahead.
Credit Card Debt Will Cost You Big Time
Let’s look at the example above from an opportunity cost perspective. We know that we are paying $18,155 over 10 years in interest alone. For the average American family making around $50,000 per year, that’s over 1/3 of your yearly salary going to your credit card holder. Countless hours of work down the drain. And it gets worse if you consider the cost of not investing that money in a broad index fund earning an average of 7% interest, which after 10 years would yield $26,839.62!
Credit card debts act as a severe headwind to achieving your financial goals. That is why when Ramona and I got married, we decided that we would never carry debt on our credit cards.
Carrying debt works against you in the exact opposite way compound interest works for you.
Credit card debt can also cause hardship in your life and relationships. I used to get calls on my cell phone number from creditors looking for the man who previously owned my phone number.
They called all…the…time…
until I finally got them to take me off their list. Needless to say, I’m pretty happy I’ve never had to deal with the crushing weight of credit card debt.
Credit cards are deceptive in their ability to gradually take over your life. Having access to credit allows you to spend beyond your means. It’s almost like getting a pay raise, except that you are borrowing against your future self.
Please I implore you don’t do it.
If you are already trapped in the debt spiral, there are literally hundreds of websites, services, and courses you can take to help you learn how to manage and eventually rid yourself of consumer debt.
Please make this a priority. If this blog helps you to cut spending in any way, first apply those saving to any credit card debt before anything else.