Because credit card debt is compounded annually, there are a number of factors that will affect any amount owed to a lender, according to a report in the San Francisco Chronicle. That $5,100 may not sound like a tremendous amount of money, but when a consumer finally pays it all off, it can add up to considerably more than that.
Given that the average interest rate on credit card debt is currently 16.75 percent per year, a balance of $5,100 costs a consumer $2.34 a day just in interest charges, the newspaper said. Over the course of a month, that adds up to $70.20, meaning that unless a consumer is paying that much when the bill arrives, they owe more to the lender than they did at the beginning.
When paying their credit card debt, consumers should attempt to pay more than the minimum so that they can reduce their total balance more quickly.