The Silent Budget Killer: How Credit Card Debt Drains Your Future
“The real basic power of an individual isn’t what he or she knows: it’s the ability to think and learn and face new challenges”
In addition to your Living Expenses and Insurance, your debt obligations can have a big impact on your Financial Nut. If your debt obligations are high, it can greatly reduce what you have available to spend today. It has become normal for most Americans to carry debt with the average credit card debt of $6,4921. With payments of $150 and an interest rate of 22.25%, it would take 90 months to pay off that debt assuming nothing additional was charged1.
I got my first credit card in my early 20’s and it felt so amazing to have increased buying power when I needed it most. I was a poor college student struggling to clothe myself and set up house and home. I didn’t have a whole lot of understanding of basic financial management and quickly ran up the credit cards and lines of credit that were given to me. I didn’t have any financial role models or anyone giving me advice on how to manage it all as credit cards were relatively new on the financial stage at the time. When I grew up, my parents didn’t use credit cards because they were generally not available as the laws were not in place that opened up the credit card industry. This may be the reason that we see the highest average credit card balances within Gen X at $9,5571. Prior to 1978, state anti-usury laws capped the interest rate that banks could charge, usually between 10 and 20 percent. This caused some problems for banks in the late 1970s, which was marked by high inflation. The interest rate caps resulted in banks borrowing money at higher rates than they could lend it. This changed with the U.S. Supreme Court decision in the Marquette National Bank of Minneapolis v. First of Omaha Service Corporation case, which ultimately allowed nationally chartered banks to offer credit cards to anyone in the U.S. and resulted in increased credit card usage.
So, if you’re like most Americans, how do you get out of credit card debt. The first step is to expand your Financial Awareness to knowing how much you owe and what interest rate you’re paying on that debt. Knowing your minimum payment will also help with coming up with a debt management plan. Gather the simple information below from your credit card statements.
Credit Card Company | Outstanding Balance | Interest Rate | Minimum Payment |
Once the credit card information is gathered, then sort the list by your interest rate from highest to lowest. Usually, you’d want to pay down the highest interest rate debt first; however, you may have a credit card with a low balance that you’d want to start with. With this in mind, pick which credit card balance you’d like to focus on first and determine how much extra you could pay. Keep in mind that any new charges on the account will offset any gains you make by making higher payments so you should also focus on not adding any new charges to this account. This is step one of your debt repayment plan. Next pick the credit card with the second highest rate and this becomes your paydown focus after the first card is paid off. Repeat for all your credit cards until you have the order of paydown. Remember, the key is paying down the cards while not charging anything additional.
1 – Frankel, Robin Saks, “How Does Your Debt Compare? U.S. Average Credit Card Debt in 2025”, Forbes, September 10, 2025, U.S. Average Credit Card Debt In 2025 – Forbes Advisor
Featured Image: Photo by Avery Evans on Unsplash
Meet the Author
Marianne Mittelstadt
Like Armond, I believe financial planning should be about far more than just the numbers. When done right, it should enhance your quality of life and transform your money into a life well lived.
My interest in economics led me to study the subject in college, which paved the way for a 20+ year career in the banking industry, specializing in data and analytics. While I was proud of the impact I made in that field, I wanted to work more closely with the people I served.
