Why You Should Care About Your Credit Card Debt

And Not Just Make Minimum Payments

person in checkered shirt talking on the phone while looking worriedly at computer

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Credit card debt can have far-reaching effects, even when you can manage the monthly payments. Carrying credit card debt costs you money in interest payments and limits your life choices, not to mention the impact it has on your emotional well-being. If you’re interested in saving money, improving your credit, and having financial success, paying off credit card debt is key.

Credit Card Debt Is a National Problem

You’re not alone in dealing with credit card debt. With the total outstanding revolving debt over $1 trillion according to the Federal Reserve, credit card debt is a problem for millions of Americans.


Consumer credit statistics from the Federal Reserve include credit card debt and other types of revolving debt, like prearranged overdraft plans. 

Credit monitoring firm Experian noted in its 2021 annual State of Credit Cards report that consumer credit card debt stood at $784.5 billion in 2021, down from $875.6 billion in 2020.

Drilling down even further, Experian’s report notes the average credit card balance stands at $5,221, down from $5,315 in 2020, a clear sign that credit card debt is headed in the right direction.

Why Credit Card Debt Is a Personal Finance Problem

It’s encouraging that credit card debt levels have dropped—average credit utilization is currently at 25%, the lowest in a decade, according to Experian—but consumers still have a long way to go. Even if you’re doing OK keeping up with your credit card payments, credit card debt may affect your life in ways you don’t realize or notice.

Credit Card Debt Is Expensive

Carrying a credit card balance means you have to pay interest each month until the debt is repaid. The higher the interest rate and the longer it takes you to pay off your balance, the more you’ll pay in interest.

For instance, a balance of $5,221 at the current average credit card APR of 21.96% wouldn’t be paid off for more than 16 years, during which you’d pay a total of $13,238.18 to the credit card company—$8,062.18 of it in interest. That calculation assumes you’d paid just the minimum due during that time (1% of the balance plus interest and a $35 minimum payment) and that you didn’t add any more debt to the account.

Credit Card Debt Limits Your Financial Choices

Many of your financial decisions hinge on your credit score, a number that’s based in part on the amount of credit card debt you’re carrying. Higher credit card balances raise your credit utilization, drop your credit score, and make it harder to qualify for new credit cards and loans. That could mean it’s more difficult to buy a house or car when you’re ready to.

Credit card debt also reduces your cash flow, making it harder to save up an emergency fund, invest in retirement, or afford large purchases, even if your credit score is good enough for loan approval.

Credit Card Debt Affects Your Mind and Your Body

Debt is a burden on your finances, and it can also be a cognitive burden. Researchers are discovering a link between debt and our ability to to think and make decisions. In one study, researchers found that impoverished people performed better on cognitive tests after they had received debt-reduction payments. Debt can also harm us emotionally and physically. Researchers in another study linked high debt levels with depression, higher perceived stress levels, and higher blood pressure.

Next Steps and More Resources 

The good news is that credit card debt is solvable. If you’re here, then you’ve probably decided to do something about your debt. The next step is figuring out how much you owe so you can begin to make a plan on how to tackle it. 

And if you’re still unsure about the dangers of credit card debt, here are a few more warnings:

If you’ve noticed any of these signs your credit card debt is out of control, take heart. You can get your debt under control.

Correction - Oct. 31, 2022: This article has been updated to correct the total amount paid to the credit card company in the first example.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Reserve. "Consumer Credit - G.19."

  2. Experian. "Credit Card Debt in 2020: Balances Drop for the First Time in Eight Years."

  3. Qiyan Ong, et al. "Reducing Debt Improves Cognitive Functioning and Changes Decision-Making in the Poor." PNAS.

  4. Elizabeth Sweet, et al. “The High Price of Debt: Household Financial Debt and Its Impact on Mental and Physical Health.” Social Science & Medicine.

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