Advertisement
Credit & Debt

How to Dig Out of Debt

I got a press release today with the headline "Consumer Debt Decreases in July," which seemed encouraging until I took a closer look at the numbers.

I got a press release today with the headline "Consumer Debt Decreases in July," which seemed encouraging until I took a closer look at the numbers. Unfortunately, the decrease is pretty small and the average credit-card debt still is pretty large. According to Credit Karma's U.S. Credit Score Climate Report, the average credit-card balance dropped just $120 in July to $6,818. With most issuers requiring cardholders to pay 4% of their balance each month, that $120 isn't even half of what a monthly minimum payment would be on a $6,818 balance.

Advertisement - Article continues below

A cardholder paying only the minimum ($272.72) on that balance would take more than 12 years to pay off the debt and pay nearly $4,000 in interest (see our What's the True Cost of Paying the Minimum calculator). If you're only paying the minimum, it's an early warning sign of credit trouble. Now would be a good time to make some changes in your spending habits or get help from a credit-counseling agency.

For advice on digging out of debt, see the stories and video below:

Advertisement
Advertisement

Most Popular

Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020
5 Unfortunate Estate Planning Myths You Probably Believe
estate planning

5 Unfortunate Estate Planning Myths You Probably Believe

These all-too-common misconceptions can steer your estate plans in the wrong direction right from the start. Here’s how to overcome them and tips to b…
September 17, 2020
Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy in trouble, tax policy takes on added importance in the 2020 presidential election. So, let's take a look at what Joe Biden has said …
September 18, 2020

Recommended

10 Things You'll Spend More on in Retirement
retirement

10 Things You'll Spend More on in Retirement

From reading materials to debt, the demands on your savings during your golden years might surprise you.
September 16, 2020
10 Things You'll Spend Less on in Retirement
retirement

10 Things You'll Spend Less on in Retirement

We spend a lot of time worrying about running out of cash in retirement. But you might be surprised to see some of the things you'll find yourself spe…
September 16, 2020
How to Catch a Rock-Bottom Rate
Buying & Leasing a Car

How to Catch a Rock-Bottom Rate

Rates on everything from home mortgages to car loans are at record lows. We’ll tell you how to qualify for the best rates.
August 27, 2020
Give Your Credit a Boost
Coronavirus and Your Money

Give Your Credit a Boost

When times get tough, your credit profile could take a hit. Here’s how to keep it in shape.
August 27, 2020