– Credit card companies charge high-interest rates, often exceeding 20%. – Unpaid balances grow rapidly due to compounded interest. – Example: A $1,000 debt at 20% interest can balloon to over $1,200 in just one year if unpaid.
– Late or missed payments are reported to credit bureaus. – Your credit score can drop significantly, affecting your ability to get loans or mortgages. – Lower credit scores mean higher interest rates on future borrowing.
– Constant worry about debt can lead to anxiety and stress. – Financial stress is linked to physical health issues like headaches and high blood pressure. – A stable financial situation contributes to overall well-being.
– High debt limits your ability to save or invest for the future. – Large debt payments reduce disposable income for other necessities. – This can prevent you from achieving financial goals, like buying a home or starting a business.