Virtually all of us have at one point or another accumulated more credit card debt than we would like. In fact, the average indebtedness ranges from a low of $10,000 to a high of more than $50,000. That’s right! It doesn’t take a math genius to realize that if you’re paying 18% on a debt of that magnitude, your great great grandchildren are likely to be the ones who are stuck paying it off!

But first, to drive home this point, let’s consider a hypothetical consumer with a credit card balance of just $1,000 and an interest rate of this same 18%. By dividing 18 by 12, you end up with a 1.5% finance charge EACH month. Now, that doesn’t sound like a lot, does it? But wait: Credit card companies usually require users to pay AT LEAST 2.5% of the balance each month. Your minimum payment would therefore be $1,000 x 2.5 % or $25.00.

Only $10 of that $25 actually goes towards paying down your balance, with the remaining $15 (or $1,000 x 1.5%) representing the monthly interest charge. In month #2, your balance drops by $10 to $990.00 and your next minimum payment is calculated by taking that same 2.5% and multiplying it by not $1,000 but by $990.00 this time, yielding a new minimum payment of $24.75 ($990.00 x 2.5%) Only $9.90 of that $24.75 actually goes towards paying down your **balance**, with the remaining $14.85 (or $990.00 x 1.5%) credited towards the **monthly interest charge**.

In month # 3, the same theory applies. Your new balance is $980.10 and your minimum payment would be $24.50 ($980.10 x 2.5%) Of this amount, $14.70 will be credited towards the monthly interest charge ($980.10 X 1.5%) and $9.80 will go towards paying down your balance.

What you’ll discover is that after shelling out nearly $75.00 in payments, you will only have reduced the balance on your card by $29.70. If you were to run the numbers out, you will realize that it will take you nearly **13 YEARS** to pay off the $1,000 of indebtedness you incurred, with another $1,115.41 of interest alone that you will be required to pay: i.e. more than your original indebtedness!

Happily, there IS a simple way around this. This is to consistently pay MORE than the minimum payment each month. By putting even an extra $10 or $15 towards each of your credit card balances, you will decrease your debt faster, lessen your repayment period and save countless thousands of dollars in interest charges over time. To calculate just how long it will take you to pay down your credit cards, go to: http://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calculator.aspx and enter your balance, interest rate and desired time frame.

It of course goes without saying that the above system will only work for you if you refrain from putting new charges on your credit cards. As much as possible, try to work from your cash reserves. Get a part-time job (babysitting, or lawn mowing if necessary) while you look for a full time job. Borrow from your family if possible, at either 0% or a low interest rate. Above all, keep chipping away at your credit card debt and you’ll soon find that you are able to live a happier, more secure life.