The average person in the UK would take over 27 years to pay off the average credit card debt at the average APR if they stopped spending now and made only the minimum repayments.
The average person in the UK has credit card debt of £2,595, according to The Money Charity, and it would take a staggering 27 years and 3 months to pay that off if you only make the minimum payment each month (based on average interest rates – see below). Add that to your age right now and try to imagine your life in 27 years’ time…!
Credit Card APRs have been rising
And it's not getting easier for credit card customers, as average credit card rates have been on the rise too, with lenders upping the interest they charge to customers who don’t pay off their balance in full each month.
According to Moneyfacts, the average rate (APR) for those making credit card purchases reached a whopping 24.7% in September 2019 – the highest since they started charting the figures back in 2006.
So, if you owe £2,595 at 24.7% APR and only make the minimum payment each month, not only will you be 27 years older when you pay it off, it's going to cost you an eye-watering £4,604 in interest as you pay off your balance. AND that's based on stopping spending now.
The good news is that there are some really simple things you can do that can have a huge impact on those numbers.
Learn how to pay off credit card debt faster and save interest
Using the average example above, the minimum payment is around £75 in the first month, which reduces each month as your balance comes down.
By changing your minimum payment to a fixed payment of £75 per month, so paying no more than you are today, you would save £3,006 in interest charges and clear your balance 22 years and 7 months sooner.
Picturing yourself in four and a half years’ time is much less mind boggling. As is the prospect of saving a small fortune in interest by making this really simple change.
ilumoni is a free app due soon. ilumoni always looks for smart ways to repay and highlights better deals so that you can have more money and more freedom. Register your interest today and we’ll let you know when the app is ready. Be among the first to Borrow Well.