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Credit card debt mounts each month thanks to compound interest

It is a well-known fact that credit cards are both a necessary part of modern life and a potentially dangerous financial pitfall. Credit card debt is among the most persistent kinds of debt carried by South Carolina residents, and it can be notoriously difficult to discharge. In fact, use of the cards can even play a role in deepening existing debt.

As most South Carolina readers are aware, a credit card user is charged interest on outstanding debt each month. For any amount not paid off in full, the credit card company will charge a monthly interest fee that can be as high as 20 percent or more of the total owed per year. Interest is added each bill cycle, which functionally means that the longer debts go unpaid, the more the debtor is paying "interest on the interest."

This is even more true of those carrying a high volume of debts on a credit card. The more money that is owed, the higher the principal will be and, therefore, the higher the ancillary interest will be each month. Paying down existing balances as quickly as possible can help to mitigate a monthly interest increase and help get an individual out of debt faster.

Of course, credit card debt is not always so easily dealt with. Some South Carolina residents lack the available funds to pay down balances immediately, and of course, going without a credit card in 2014 is not the easiest solution. Those carrying heavy debt may benefit from researching a multitude of options for debt reduction such as financial counseling, restructuring and bankruptcy.

Source: theranger.org, "Credit cards can get you further in debt", Ty-Eshia Johnson, March 27, 2014

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Reed Law Firm, P.A.
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Suite 301

Columbia, SC 29210

Phone: 803-726-4888
Fax: 803-726-4887
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Florence, SC 29501

Phone: 843-679-0077
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