It happens to people all the time...while driving around, looking for a quick bite to eat, you stop at a drive through and look in your wallet, only to find you have no cash. Instead, you use your credit card. Before you eat that burger, you should know, if you don't pay your credit card bill on time, that $4.00 burger could double in price...thanks to interest.
The burger example is just a small example of how credit cards can cost you if you don't pay on time.
According to Bankrate.com, the average interest rate on credit cards is 19%. About 60% of active credit card accounts are not paid off monthly. The average credit card debt among all American households is $8,400.
If you owe $1,000 on an average credit card, and you make only the minimum payments, it will take nearly 20 years to pay it off. And, at the end, instead of $1,000, you'll end up paying over $3,000.
So the next time you get ready to use that credit card for fast food, or any other purchase, think about how long it might take you to pay off that purchase in the long run.
Next time: Department store credit cards...is it smart to get the discount you often receive for signing up, or should you avoid them altogether? We'll tell you next week!