Compound interest on debt – A borrowers worst nightmare Leave a comment

After Americans become an adult, most of their daily hours are spent in the pursuit of making money. Yet, most are ignorant when it comes to money, finances, and debt. One of the worst decisions that most make is getting into debt with high-cost debt to purchase non-necessary consumer goods. The average credit card interest rate is currently 22.90%. However, because this interest compounds, in a very short period the money owed on the debt increases dramatically. For instance, assume one borrows $100 on a credit card with an interest rate of 22.90%. With no payments, the borrower of $100 of debt would own $786.17 in 10 years. This is why interest compounding is the borrower’s worst nightmare.