High Borrowing Rates Generate Compound Interest
Credit card users who find themselves in debt for large amounts of money need to take action to pay off the cards.
Large balances have multiple negative impacts on consumers:
- Interest costs mount up quickly due to high interest rates.
- Consumers have difficulty saving for large purchases, such as a down payment on a home or vehicle.
- Large balances lower credit scores, which may result in higher rates on other loans.
- Balances owed count toward debt ratio calculations when financing a home.