After the holidays, any extra spending you put on credit cards can come back to haunt you. In fact, the average American added $986 in debt during the holidays in 2014. In a survey performed with an national sample of 403 Americans, they reported that the average amount they added to their accounts was $986, and 44 percent of debt holders stated they were stressed about it. Maybe most shocking is that with a 15 percent interest rate and a minimum payment of $25, this relatively low amount can take over 10 years to pay off and include another $400 in interest.
In most cases, the debt added came in the form of credit card debt. Around 30 percent of people used store cards to finance their shopping, despite the fact that interest rates can be 20 percent or higher. Under 5 percent of people used home equity lines to finance their purchases.
In many of these cases, the payoff for the debt could take until next year’s holidays or longer. Around 55 percent of the people involved in the study said they’d take over five months to pay back the debt, which could take up to 10 years in some instances. Around a third of people who responded were paying over 10 percent on their debt, and 20 percent pay 15 percent or more.
With any debt, the longer you take to pay, the more it will cost you. There are options out there for people who can’t make their payments or who have too much debt; your attorney can advise you on the best options available for your personal situation.
Source: Magnify Money, “Americans with Holiday Debt Added $986 on Average,” Nick Clements, accessed Dec. 29, 2016