Beware of Drowning in Credit Card Debt

Over $3 billion outstandingly in credit card debt and are paying an average of 18 percent on that debt.

Credit card companies encourage you to be a "revolver," someone who does not pay off the balance each month. Nearly 60 percent of card-holders do this, and the balance they carry each month is over $3,000. Resist the temptations that the credit card companies dangle in front of you to put off paying your balance in full each month.

Credit card companies make the bulk of their profits from the revolvers. As a consumer, you are paying the credit card company an annual fee to use the card, and then you are paying monthly interest charges to carry out your balance. The credit card company paid the bill for whatever you charged, but not out of the goodness of its heart.

According to Bank Rate Monitor, consumers have over $3 billion outstandingly in credit card debt and are paying an average of 18 percent on that debt. By carrying a $3,000 balance and only making the minimum payments each month, it would take you 36 years and two months to pay off the card, and you would have paid $7,587 in interest. That sounds like a lot of money and it is! However, that would all be in after-tax dollars, so you would need to earn almost $10,000 to pay off that debt if you were in the 28 percent tax bracket. Ouch! the banks are making a nifty profit on the backs of the consumer. If you are carrying credit card debt month, you may soon be drowning in debt.