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How Much is Credit Card Debt Costing You? Thumbnail

How Much is Credit Card Debt Costing You?

Credit card debt – it’s something that hangs over many Americans. According to the Federal Reserve, in 3Q2019 the average credit card debt equaled $8,398 per U.S. household1. This assumes that EVERY adult has a credit card and that those cards carry debt. But not all adults own a credit card and not all households with credit cards carry a balance each month. The only way to reduce credit card debt is to make payments each and every month. To reduce this even faster you should pay more than the minimum payment each month. 

Save Nearly $4,000 by Paying More than the Minimum Balance

By only paying the minimum monthly balance, you are guaranteed to extend the amount of time it will take you to pay off your credit card and increase the amount you will pay. Take this example:

Total Credit Card Debt

Monthly Payment

Years to Pay Off

Total Cost

$3,364 (at 14.96% Interest)

$67.28 (min. payment)

19 Years 5 Months

$7,618.63

$3,364 (at 14.96% Interest)

$87.28 (min. payment +$20)

4 Years 4 Months

$4,533.67

$3,364 (at 14.96% Interest)

$107.28 (min. payment +$40)

3 Years 4 Months

$4,225.11

$3,364 (at 14.96% Interest)

$167.28  (min. payment +$100)

1 Year 1 Month

$3,841.40


In this example, finding an extra $100 a month to apply to credit card payments reduces the time it will take you to pay off this debt from over 19 years to just over 1 year AND saves you nearly $4,000.

Use this great free calculator to see how long it will take you to pay off your credit card debt. You can see how long it will take if you only make the minimum payment, how much you will save by paying more, and you can find out how much you will need to pay each month to be debt free in a time period you designate.

How to Find $100 Extra a Month to Pay Down Debt or Save

The 2019 Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics2 broke down how American consumers spend their money. Based on the numbers, here are a few ways households can find money to pay down debt and save: 

  1. Cut car insurance rates by shopping around and save  $70 a month.
  2. Reduce eating out by half and save $56 a month. 
  3. Cut your entertainment costs in half to save $40 a month. 
  4. Shop smart for apparel and save $47 a month. 

Need help finding ways to save? Take the America Saves pledge to make a commitment to yourself to save and receive emails and/or text messages to keep you motivated. Over your head and need help with debt? Visit this page to find out what resources are available to help you get out of debt. 

  1. https://www.newyorkfed.org/microeconomics/hhdc
  2. hhttps://www.bls.gov/news.release/pdf/cesan.pdf

America Saves, managed by the Consumer Federation of America (CFA), is a non-profit research‐based social marketing campaign that seeks to motivate, support, and encourage low- to moderate-income households to save money and build wealth. Learn more at americasaves.org