TOO DAMN LONG
Americans owe a collective $1 trillion in credit card debt, a reflection of the failure of wages to keep up with the cost of living over the past few decades. Credit card debt tends to come with extremely high interest rates, which is why personal finance experts almost always advise people to pay off credit card balances before devoting excess income to other savings or debt-reduction goals. So what would happen if someone earning the median income tried to pay off the average credit card debt at the median interest rate by throwing 15% of their income at the debt each month? It would take anywhere from nine to 17 months, according to a new map from HowMuch:
This map is based on an analysis by CreditCards.com, which crunched these numbers assuming that the average earner could devote 15% of their gross (rather than post-tax) income to paying off debt — not an insignificant percentage! They also assumed that each state’s average credit card balance came with an interest rate of 20.8 percent, the median APR for all credit cards nationwide.
Thanks to that steep median interest rate, people in states with the highest debt-to-income ratios would end up paying four figures in interest alone using this plan. In New Mexico, the state with the highest credit card debt burden, someone using 15% of the median income of $46,744 to pay off the average credit card balance would end up paying a whopping $1,319.59 in interest. By contrast, in Massachusetts, the state with the lowest credit card debt burden, someone using 15% of the median income of $77,385 to pay off the average credit card balance would only end up paying $708.46 in interest — not chump change, but not as outrageous as $1,319.59.
[Read more at HowMuch and CreditCard.com]