Texans apparently love to charge it. A new report from ChamberofCommerce.org ranks Texas third in the nation for highest average credit card debt, at $9,100 per person. That trails only Alaska ($10,685) and Virginia ($9,120). Overall, the trend toward higher credit card debt has gotten worse in recent years, with the national total now surpassing $1 trillion.
While $9,100 is a lot of money for the average person to owe, the actual cost of that debt is far higher, according to Bruce McClary with the National Foundation for Credit Counseling (NFCC). "A lot of people are paying 14, 15, 16, even 17 percent interest, on average...and people with bad credit have to pay interest rates that are even higher," he says. "Over the lifetime of paying off that debt, people can pay thousands and thousands of dollars in addition to the balance that they're carrying now."
Indeed, ChamberofCommerce.org finds that people in many states are paying an extra $10,000 in interest alone on their credit cards by only making the minimum payment each month. The Federal Reserve has found that over 40 percent of debt-carrying Americans only make minimum payments. "The main thing is to pay more than the minimum payment each month," says McClary. "A total like $9,000 or $10,000 could take 15 or 20 years to pay off if you're just making the minimum payment, because so little is being applied to the principal balance and the majority is being applied to the interest...it's like lighting money on fire when you do it that way."