This article is reprinted by permission from NerdWallet. When you’re carrying a credit card balance, paying at least the minimum due each month is certainly a start. If those payments aren’t making your overall budget feel squeezed, you have all the more reason to put payments on autopilot and not think about the total cost of your debt.
“Our pace of life has gotten really busy,” says Delia Fernandez, a certified financial planner and the founder and president of Fernandez Financial Advisory LLC in Los Alamitos, California. “There’s always something that’s more important, particularly for these people who are not in a financial crisis.” But that inertia can cost you, especially with average credit card interest rates reaching 20.4% as of November 2022, according to the Federal Reserve. NerdWallet’s 2022 American Household Credit Card Debt Study, conducted by Harris Poll, found that U.S. households with revolving credit card debt are paying an average of $1,380 in interest this year. There is good news, though: Dedicating even a small amount of time and money to changing up your payment habits can be well worth the effort. Consider the total — not monthly — cost of interest While the slow drip of interest payments might feel manageable month to month, thinking of your debt this way ignores how much interest adds up over time. “If you’re only able to make minimum payments and you’re paying the average interest rate, it could cost you thousands over many, many years if you’re paying down a balance of $10,000,” says Bruce McClary, senior vice president of membership and communications at the National Foundation for Credit Counseling. “It’s stunning how much it could cost you.”
“By paying $240 per month instead of $200, you’ll spend $4,9 …