What Your Credit Card Debt Is Really Costing You

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According to a new study, Americans now carry an average credit card balance of $15,355. At the average interest rate of 18%, it costs $6,658 per year to maintain that balance – and that’s just credit card interest payments, not even making a dent in the principal credit card balance.

When we think of credit card debt (or any kind of debt, really), we often omit the accruing interest expense. This happens with certain types of debts more than others. For example, you might hear someone say that they bought a house for $200,000 only to sell it five years later for $215,000. Seems like a profit of $15,000, right?

Well, that’s not exactly true. At a normal interest rate today, the interest in the first five years on that home would reach about $35,000. These hypothetical homeowners didn’t even break even – they lost $20,000 due to interest payments! And that doesn’t even include upkeep and other oft-overlooked expenses that come along with homeownership.

Our point is that credit card debt more than the superficial balance owed on purchases. The amount you owe, the principal, can seem like a big number. It can take a long time just to make back the principal, but it’s the interest that can really trip up consumers and create errors in the mental math we do when deciding whether a purchase figures into the budget.

If you are carrying credit card debt, there are other non-financial “costs” that often go overlooked, even though they are felt. Here are some of the biggest “costs” of credit card debt:


The study referenced above found that 35% of Americans would be embarrassed to share their level of credit card debt. Those same people are more likely to feel less embarrassed sharing other forms of debt like a home loan or school loan.

There is a stigma with credit card debt. People in that study say they have more sympathy for family and friends with credit card debt, but would be hesitant to date someone with a credit card balance. That is, we’re more likely to judge those that we don’t know.

Embarrassment is a powerful emotion. It can weigh you down like you have a dark cloud over your head everywhere you go. When you’re dating, meeting with new people or even paying for groceries, it’s easy to feel judged and fear what may happen if someone found out about your balance.

Physical Health

Credit card debt can also have an impact on your mental and physical health, causing additional health and negatively affecting your state of mind. One study found that college age students with credit card debt directly correlating with these risk indicators:

  • Insufficient physical activity
  • Excess television viewing
  • Infrequent breakfast consumption
  • Increased fast food consumption
  • Binge drinking
  • Violence


These indicators correlated with credit card debt. The debt may not cause the issues with physical well-being, but the stats suggest that if you have debt you’re more likely to have physical health issues. This effect is manifold for consumers whose debt was created by a healthcare issue in the first place.

Mental Health

The physical issues correlated with high debt balances may ultimately be a result of mental health as it relates to credit card debt. A recent study found a direct link between credit card debt and depressive symptoms. The connection was especially strong for singles and people nearing retirement age.

That makes sense; we saw in the earlier study that people often avoid relationships with those that have large credit card balances. And when you’re nearing retirement age it’s a time to consider your financial health as you look to retire and enjoy your later years.

What You Can Do

Credit card debt is often swept under the rug. Instead of dealing with the situation in your regular budget, it’s easy to look for a quick way to forget about it, even if it’s only for a short time.

However, the only way to avoid the costs mentioned above is to address your credit card issue. That means coming up with a plan and figuring out how to settle your credit card debts.

Simply having a plan can ease your mind and help with the costs above. There will still be costs and payments as you work through your plan, but seeing that there is an end in sight brings relief for many people.

For more information please visit our page on Debt Settlement to learn more about how we can help you settle your credit card and other debts today.

Photo credit: Crashmaster007 via Visual hunt / CC BY-NC