Credit card debt – it’s something that hangs over many Americans. According to the Federal Reserve, in April 2013 the average credit card debt equaled $3,364 per U.S. adult. This assumes that EVERY adult has a credit card and that those cards carry debt. But not all adults own a credit card. Young Americans are among those ditching their credit cards 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 ((107.28 (2 Monthsent +$20)Meetingyou orriginally neimum balance of redit card and the amont you a credit card. Take for example min. payment +$40)

3 Years 4 Months

$4,225.11

$3,364 (at 14.96% Interest)

$167.28  ((107.28 (2 Monthsent +$20)Meetingyou orriginally neimum balance of redit card and the amont you a credit card. Take for example 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 2011 Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics broke down how the poorest 20% of Americans spend their money. Based on the numbers, there are a few ways even these household can find money to pay down debt and save. 

 

    1. Turning off your cell phone or cable while you pay down debt could save you $50 a month. (You can turn it back on as a reward when your credit card debt is gone or save it.)

 

    1. Stop smoking a save $25 a month.

 

    1. Cut your entertainment costs in half to save $40 a month.

 

    1. Find a penny pick it up, by savings $.50 in change a day you will save $15 a month.

 


Servicemembers who find themselves in deep credit card debt and falling behind on payments may find their credit score affected and in turn their security clearance. In addition to these tips, remember that help is near; you can contact a personal financial counselor on the installation or through MilitaryOneSource.mil to receive help.

Take the Military Saves pledge to make a commitment to yourself to save and receive emails to keep you motivated. In 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.

By Katie Bryan, America Saves Communications Director 
Military Saves
, a component of America Saves and a partner in the Department of Defense’s Financial Readiness Campaign, is a research-based social marketing campaign to motivate, support, and encourage military families to save money and build wealth. For more information please visit www.militarysaves.org.

August 06, 2013

Leave a Reply

Your email address will not be published. Required fields are marked *