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 card 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.

Learn More:

 

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Saving for a rainy day? Put your #taxrefund into emergency #savings >> http://bit.ly/2hTDPg2 via @AmericaSaves

Share Your Tip or Story

And if we feature you in our newsletter, you get $25.

Share

Saver Stories View all »

The Gift of Homeownership

Quaneka Willis, a single mother of three children, was receiving rental assistance through the Housing Authority of the City of Milwaukee when she decided to take control of her finances. So, in September of 2013 she attended the Make Your Money Talk program and pledged as a Wisconsin Saver. In less than 12 months, she had maximized her savings and was beginning the process of purchasing her first home.

Read more...

Another Dream Realized

Mary Brown was already a disciplined individual when she came to Wisconsin Saves coordinator Wisconsin Women’s Business Initiative Corporation (WWBIC) in last summer. She had successfully completed her bachelor’s degree with the assistance of her husband and son, and was now ready to tackle her next big dream – homeownership.

Read more...

Taking Steps Toward Financial Fitness

Nicky Vasquez learned about Virginia Saves when she attended her first class with Bank On Virginia Beach. The instructor shared how important it was to have a written savings goal, and the entire class joined Virginia Saves as the first step toward financial fitness.

Read more...

Receive Updates

Sign up for Texts

Sign Up

Sign up for Emails

Get Emails

Take the Pledge

Start Saving