The average amount of credit card debt for a student is $2700.00, but many students have even higher debt. The average interest rate on a standard card is about 13%, but many students pay much higher rates due to their short credit history. Making the minimum payment each month on a $4600 card debt, it would take 250 months (almost 21 years) to pay off the debt and cost $4,868 in interest. If a 20 year old was able to instead find a card with only a 7% interest rate, he or she could instead be completely out of debt in less than 10 years. If he/she then chose to invest the savings until retirement, this could be worth nearly $500,000. Explore the links below to see how you could save on credit cards.
- http://www.indexcreditcards.com/ is another good index of credit cards by type. Start your search here. Newsweek magazine called this “As comprehensive a list as you'll find of all the credit card offers on the table now.”
- http://www.federalreserve.gov/pubs/shop/default.htm Credit card terms can be complicated. This great publication from the Federal Reserve breaks things down and makes them very understandable.
- www.powerpay.org is an awesome site that provides information on how to get out of debt quickly following an accelerated debt reduction plan.