Credit Card Debt?

According to the Federal Reserve, credit card debt is now nearly $1.4 trillion, which is a 4%  increase from last year and the level is even higher than in October 2018, at the height of the financial crisis.

The “economy” now looks good and consumer confidence is up.  Young people are taking on more debt and older people are “retiring” with mortgage debt, credit card debt, and even student loan debt.
Add in the mindboggling (and daily increasing) level of our nation’s debt, and it certainly seems that Americans are far more experienced with crisis intervention than with crisis prevention.  We haven’t yet mastered long-term thinking.
For anyone in credit card debt the first step is simply stop the bleeding.  Hide the cards from yourself or freeze them in a block of ice – whatever it takes to stop using them.
In my counseling office I kept a big pair of scissors that I offered to clients to cut up their cards, and I displayed a plastic milk jug filled with them.  I wish that I had snapped a picture of that jug before I destroyed the remnants!
Some clients decided that they weren’t quite ready to cut them up.  After all, what about emergencies, or car rentals, or airline or hotel reservations?  What about my credit score, and what’s wrong with using a credit card if I pay it off every month?
Some enthusiastically cut them into itsy-bitsy pieces.  The sigh of relief and the satisfaction that I saw in them afterwards is priceless.  Others believe that they cannot live without credit cards, but it’s an illusion.
If you’re a counselor at heart, here’s an assignment for you.
Your two very best friends, a newly married couple with no children, have credit card debt, and they know that high-interest debt is no good, but cannot yet “feel” it.
They have a card that charges 18% interest and has a minimum payment of 2% per month.  If they have a $6,500 balance and they pay only the minimum payment each month, how long will it take them to pay it off?

Be aware: Even people who should know better get this one wrong.  They might tell you that the minimum payment = $6,500 x 2% = $130.00.

But to arrive at the correct answer – which is decades (and many thousands of dollars) away from that one, you will need a calculator that allows input of how the minimum payment is calculated, like the one at

Have fun with this one – it can be quite an eye-opener!  For example, you can click on “Show payment schedule” and scroll down to see what the balance will be at the end of five years, 10 years, and so on.  You can also try various scenarios, such as if they would pay a steady $130 every month rather than the 2% minimum.
The student loans are a federal government mess that needs a solution – perhaps many.


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