Is 15k in credit card debt bad?
It's not at all uncommon for households to be swimming in more that twice as much credit card debt. But just because a $15,000 balance isn't rare doesn't mean it's a good thing. Credit card debt is seriously expensive. Most credit cards charge between 15% and 29% interest, so paying down that debt should be a priority.
$15,000 can be an intimidating total when you see it on credit card statements, but you don't have to be in debt forever. If you're struggling to make your minimum payments every month and you don't see light at the end of the tunnel, sign up for a debt management program to get out of debt fast.
Adam McCann, Financial Writer
It will take 32 months to pay off $15,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
- Create a Budget. ...
- Debt Management Program. ...
- DIY (Do It Yourself) Payment Plans. ...
- Debt Consolidation Loan. ...
- Consider a Balance Transfer. ...
- Debt Settlement. ...
- Lifestyle Changes to Pay Off Credit Card Debt. ...
- Consider Professional Debt Relief Help.
Having any credit card debt can be stressful, but $10,000 in credit card debt is a different level of stress. The average credit card interest rate is over 20%, so interest charges alone will take up a large chunk of your payments. On $10,000 in balances, you could end up paying over $2,000 per year in interest.
Debt Consolidation Loan
If you owe $15,000 on a credit card with a lot of interest, combining all that debt into one personal loan with a lower interest rate can be a good idea. This simplifies your debt repayment process because you only have to make one monthly payment and pay less interest overall.
Overall, the national average card debt among cardholders with unpaid balances in the fourth quarter of 2023 was $6,864, down from $6,993 in the third quarter. That includes debt from bank cards and retail credit cards.
- Make a Budget and Stick to It. You must know where your money goes each month, full stop. ...
- Cut Unnecessary Spending. Remember that budget I mentioned? ...
- Sell Your Extra Stuff. ...
- Make More Money. ...
- Be Happy With What You Have. ...
- Final Thoughts.
- Using a balance transfer credit card. ...
- Consolidating debt with a personal loan. ...
- Borrowing money from family or friends. ...
- Paying off high-interest debt first. ...
- Paying off the smallest balance first. ...
- Bottom line.
Generally speaking, negative information such as late or missed payments, accounts that have been sent to collection agencies, accounts not being paid as agreed, or bankruptcies stays on credit reports for approximately seven years.
How many people have 10k in credit card debt?
3 tips to pay down your credit card debt quickly
About 14 million Americans are at least $10,000 in credit card debt, according to a new survey. Here's what you can do to pay yours down.
The general rule of thumb is that you shouldn't spend more than 10 percent of your take-home income on credit card debt.
By making a credit card payment 15 days before your payment due date—and again three days before—you're able to reduce your balances and show a lower credit utilization ratio before your billing cycle ends. That information is reported to the credit bureaus.
$20,000 is a lot of credit card debt and it sounds like you're having trouble making progress,” says Rossman.
- Opt for debt relief. One powerful approach to managing and reducing your credit card debt is with the help of debt relief companies. ...
- Use the snowball or avalanche method. ...
- Find ways to increase your income. ...
- Cut unnecessary expenses. ...
- Seek credit counseling. ...
- Use financial windfalls.
| Credit score range (FICO) | Average debt (2022) | Average debt (2023) |
|---|---|---|
| 300-579 (Poor) | $18,893 | $20,766 |
| 580-669 (Fair) | $27,456 | $29,123 |
| 670-739 (Good) | $28,227 | $29,625 |
| 740-799 (Very good) | $20,218 | $20,991 |
- Tip #1: Don't wait. ...
- Tip #2: Pay close attention to your budget. ...
- Tip #3: Increase your income. ...
- Tip #4: Start an emergency fund – even if it's just pennies. ...
- Tip #5: Be patient.
- Make a list of all your credit card debts.
- Make a budget.
- Create a strategy to pay down debt.
- Pay more than your minimum payment whenever possible.
- Set goals and timeline for repayment.
- Consolidate your debt.
- Implement a debt management plan.
Debt settlement can have a negative effect on your credit. How bad will it be? It's impossible to predict the exact number of points you'll lose, or when you'll be able to get approved for financing again, since there are a number of factors that come into play.
The simple answer is that having minimal credit card debt is the best policy. The more complex answer: “it depends.” How much credit card debt is okay for one person may not be okay for the next – it all depends on your financial situation, your spending habits and your overall credit limits.
What is considered heavy debt?
Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.
A lower credit utilization ratio is always better. In fact, it's a myth that you need to carry credit card balances to maintain a high credit score. If you pay off your debt in full every month, it's the best thing you can do for your credit. By contrast, it hurts your score when your balances are too high.
The 20/10 rule follows the logic that no more than 20% of your annual net income should be spent on consumer debt and no more than 10% of your monthly net income should be used to pay debt repayments.
Here's the average debt balances by age group: Gen Z (ages 18 to 23): $9,593. Millennials (ages 24 to 39): $78,396. Gen X (ages 40 to 55): $135,841.
1% of the balance plus interest: It would take 29.5 years or 354 months to pay off $10,000 in credit card debt making only minimum payments. You would pay a total of $19,332.21 in interest over that period.
