What is Debt and Why is Too Much Debt Costly?
Debt is something, typically money, that is owed or due. Borrowing more money than you can afford is costly in many ways. According to the Federal Reserve, in April 2013 the average credit cards debt equaled $3,364 per U.S. adult. If you paid just the minimum amount due ($67.28), it would take you over 19 years to pay off this debt. And you would pay a total of $7,618.64 over this time, that’s $4,254.63 more than you borrowed.
Taking on too much debt also lowers your credit score. That means you will end up paying higher interest rates on all your consumer and mortgage loans. A low credit score can also make it harder to rent an apartment, get utility services, and even get a job.
Too much debt isn't just expensive. People with lots of debt often say they lack peace of mind. They worry constantly about paying off debts and making ends meet. The stress of these worries affects their family life, work performance, and other areas of their lives.
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.