If you're only paying the minimum on your credit card balance, it may be time to rethink your strategy.
The typical American household would need about 13 months to pay down the average debt of $8,195, according to a recent analysis by CreditCards.com. That's assuming they're being very aggressive and putting 15 percent of their income toward paying off debt. (The American Consumer Credit Counseling recommends allocating about 5 percent of your income, and Northwestern Mutual recently found that two in 10 people allocate over 50 percent of their income toward getting out of the red.)
What if you don't have 15 percent of your income, or even 5 percent, to spare? It's still better to pay more than the minimum, which is the least you're allowed to pay without incurring a late fee or other charges. Otherwise you could be stuck paying far more money for a far longer time, according to CreditCards.com industry analyst Ted Rossman.
"If you're only making the minimum payment, which is typically 1 percent of the balance plus interest, you're going to be in debt for literally decades," Rossman says. Over two decades, to be precise. Here's how it breaks down.