By most accounts, the average American household carries more than $8,000 in credit card debt.  At an average interest rate of 14%, a person who pays the monthly minimum would need 27 years to get out of credit card debt at a cost of $10,310.  What happens when that rate jumps to 29.99%?  According to the credit card calculator at the Federal Reserve’s website, making the minimum payments will keep you in debt for life.

While the Federal Reserve’s calculator uses 2% as the monthly minimum payment amount, many credit card companies require minimum payments of 3% to 4%.  Thus, if a person paid 3% of the initial debt ($240 every month) the time to repay an $8000 balance with a 29.99% interest rate shrinks to slightly more than 6 years and will rack up $9520 in interest expenses.

Clearly, paying only the minimum amount due on a credit card with a high interest rate is an uphill battle.  And when that interest rate is 29.99%, it is a near impossibility.  In the past, only consumers who failed to make payments were slapped with 29.99% interest rates.  However, many Citi credit card customers are opening up their most recent credit card statements and finding that, for no apparent reason, their rates are now 29.99%.  These people may never know a debt free life unless they are able to negotiate more reasonable rates with Citibank or enlist the services of a certified credit counselor.

Paying the minimum, however, is not an option unless you know the location of the fountain of youth.

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