The Real Cost of Debt

Did you know that credit card debt in the US has surpassed $1.2 trillion? The “average” American’s credit card debt is now over $6,000. If you’ve got credit card debt you likely know how overwhelming trying to manage it can feel.

One of the most crucial things to grasp about debt is its true cost, thanks to compound interest. While beneficial when it’s working for your savings, it can significantly inflate the cost of high-interest debt like credit cards.

Let’s put it in perspective with a quick quiz:

Imagine you purchase something for $1,000 using a credit card with a 20% interest rate. If you only make the minimum payments each month, how much extra will you end up paying in interest on top of that original $1,000?

A. $100 (Total cost: $1,100)

B. $267 (Total cost: $1,267)

C. $661 (Total cost: $1,661)

Curious about the answer and want to better understand how compound interest impacts your debt? Find out the answer right here.