5 Things You Must Know About Credit Card Debt

by Carter Toni

Credit cards can be slow killers when you rely on them too much. However, if you are smart, you can forge a healthy and fruitful relationship with credit cards. Many people fall under a lot of credit card debt because of a lack of knowledge and awareness. You might already have a vague understanding of how credit cards work, but the devil is in the details. So let us take a look at five things that you need to know about credit card debt.

1. You must understand different interest rates

Credit card interest rates can range anywhere between 15% to 30%. Your creditor determines your annual percentage rate (APR) by looking at your credit score, income, current debt, payment history, financial condition, and assets. So if you have a positive and proven credit history you are very likely to get a much better APR as opposed to someone who often misses their bills, has a poor credit score, and is in a bad economic condition.

2. Missing your credit card bills will build debt

Credit card issuers have a lot to gain from you making minimum payments every month. This way it takes you much longer to pay off the debt and creditors keep getting interest payments in the meanwhile. Moreover, the moment you miss a payment cycle it starts a chain reaction which not only hurts your credit score but also results in higher interest rates in the next cycle. This way you will keep accumulating more and more debt every month and ultimately you might have to take another loan for credit card debt just so you can find a way out.

3. Credit card debt affects your credit score

Credit card debt can ruin your credit score. In order to maintain a high credit score, you must have your account balance at 30% of your credit limit. Plus the moment you miss a payment cycle your credit score takes a big hit. Your creditor reports this delinquency to the three major credit reporting bureaus and your credit score plummets. Plus those negative marks are going to follow you around like a nightmare for the next seven years See also: How debt settlement works

4. It monopolizes your income

Credit card debt takes a massive chunk out of your paycheck every month. Not only do you have to make minimum payments every month, but you also run the risk of ruining your credit score if you miss a single payment. Moreover, you keep accumulating interest on your debt the longer it takes you to pay it off. Every month you end up paying a hefty amount of money in credit card debt repayments that could have been put to better use for example in an emergency fund or a side hustle.

5. You can always settle your debt

You can settle your credit card debt for a lot less than you actually owe by offering a lump sum to your creditor. It is best to do this deal on your own rather than getting professional help because financial counselors cost a lot of money and don’t even guarantee the desired outcome. So it is best to do it on your own and save some money.


This article introduces you to things that you might not have known previously about credit card debt. If you are someone who is looking to get a credit card, make sure you don’t start using it recklessly. Remember, you don’t have to be under credit card debt if you learn to be smart about the way you use your credit cards.

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