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CBS News
3 hours ago
- Business
- CBS News
How long will it take to pay off $40,000 in credit card debt?
Credit card debt has reached alarming heights for millions of Americans, with many cardholders now carrying balances that would have seemed unthinkable just a few years ago. For example, the average cardholder now carries about $8,000 in total credit card debt, but with so many people now reliant on their credit cards to make ends meet, some cardholders are carrying a lot more than that. And if you're dealing with a hefty level of credit card debt — let's say $40,000 worth — even the most disciplined cardholders can find themselves trapped in a cycle where the monthly payments barely make a dent in the balance. That's because at today's nearly 22% average credit card rate, the mathematics of this type of high-rate debt can work against you in brutal ways. When you're carrying $40,000 worth of debt across multiple cards, the interest charges alone can easily cost you hundreds of dollars per month, and if you're only making the minimum payments, that money is going almost entirely toward interest rather than reducing what you actually owe. This creates a situation in which years of payments can pass without meaningful progress. How long will it realistically take to dig out of a $40,000 credit card debt hole, though, and what strategies can help you do it faster? Here's what you need to know. Find out whether you qualify to have your credit card debt forgiven now. Let's look at several realistic repayment scenarios for a $40,000 credit card balance at the current average rate of 22.76%: If you stick to minimum payments, which is typically around 1% of your balance plus interest, your minimum payment would start at about $1,166.67 per month. Here's how long it would take to pay off what's owed: If you can commit to a slightly higher fixed payment of $1,200 per month, here's how long it would take you to pay off the full balance: Here's how long it would take to pay off with a more aggressive $1,500 fixed monthly payment: And, here's how long it would take for those who can make more substantial monthly payments of $1,800: Note, though, that these calculations assume you're not adding any new charges to your cards, which is a critical factor that's easy to overlook when planning your debt elimination strategy. Learn more about the debt relief strategies available to you today. When you're dealing with $40,000 in credit card debt, traditional budgeting and payment increases might not be enough. Here are debt relief approaches specifically designed for large balances: Debt settlement, also referred to as debt forgiveness, is often the most viable option for substantial credit card debt. Through this process, you or the debt relief company you work with negotiate with your creditors to settle the debt for a lump sum payment that's less than what you owe. While it can vary, the average debt settlement typically results in paying 50% to 70% of the original balance. While debt settlement will impact your credit score and may have tax implications, it can provide a realistic path to becoming debt-free in two to four years rather than decades. Consolidating your debt can be a smart approach if you have decent credit and can qualify for rates significantly lower than your credit cards. A $40,000 debt consolidation loan at 12% APR over five years would cost about $889 monthly but save you tens of thousands in interest compared to making just the minimum payments. Transferring your balance to a card with a 0% promotional interest rate can be more complex with large amounts of credit card debt because most cards have transfer limits. However, you might be able to move portions of your debt to a card with a 0% APR promotional offer, giving you breathing room to attack the principal more aggressively. If you enroll in a debt management program, the credit counseling agency you work with can help you come up with a realistic payment plan and negotiate reduced interest rates and fees with your creditors, often cutting your rates to a fraction of what they currently are. This approach keeps your accounts in good standing and is less damaging to your credit than debt settlement. Filing for bankruptcy might be appropriate if your debt-to-income ratio is unmanageable and other debt relief options aren't viable. Filing for Chapter 7 can eliminate credit card debt entirely, while Chapter 13 creates a structured repayment plan. Carrying $40,000 in credit card debt is undeniably serious, but it's not an insurmountable issue. It's important to recognize, though, that making just the minimum payments will keep you trapped for decades while costing you a hefty amount in interest. So, it's important to come up with a plan that lets you tackle this amount of debt in a better way, whether through aggressive payment increases, debt consolidation or another type of debt relief. The longer you wait, though, the more expensive your debt becomes, so evaluate your options and choose the strategy that aligns with your financial situation and your long-term goals.
Yahoo
5 hours ago
- Business
- Yahoo
Canada's retail sales shrink as tariffs bite, June expected to improve
By Promit Mukherjee OTTAWA (Reuters) -Canada's retail sales shrank by 1.1% in May as consumers curtailed car purchases and spent less at supermarkets, convenience stores and on alcohol, data showed on Thursday. Retail sales - closely watched by economists as they give an indication of GDP trends - had held up fairly strongly in the last two months, as concerns around the timing and magnitude of tariffs threatened by U.S. President Donald Trump brought forward purchases. But sales weakened as the impact of tariffs started hitting consumers and the general outlook around the economy paled. By contrast, an early or "flash" estimate showed retail sales likely grew 1.6% in June, though this figure is prone to correction, statistics agency StatsCan said. Analysts polled by Reuters had expected a drop during May, similar to what was reported, and barring autos and auto parts, which contribute almost 30% to overall sales, they had predicted a drop of 0.3%. Sales excluding autos in May were down 0.2%, StatsCan added. The biggest drop was posted in the motor vehicles and parts dealers category, where sales contracted by 3.6%, after two consecutive months of increases. The drop was led by 4.6% lower sales at new car dealers, which fell for the first time since February, it said, adding that in volume terms, retail sales decreased 1.4% in May. LOWER BEER SALES Another declining sector was food and beverages. This category, which contributes up to 18% of total retail sales, saw purchases shrinking by 1.2%, led by lower transactions at convenience stores and a decline in sales of beer, wine and liquor. Economists noted the expected rise in sales in June which could indicate that GDP might improve in the second half of the year, but said trade tensions are likely to keep consumer spending under check. "Unless a trade deal is reached to significantly reduce U.S.-Canada tariffs ... we expect households will continue to tighten their purse strings as job losses and higher prices from tariffs squeeze disposable income," said Michael Davenport, senior economist at Oxford Economics. The Bank of Canada will announce its rate decision next week and is likely to keep borrowing costs on hold, but most economists expect the central bank will need to start easing rates again to support the economy. The largest increase in retail sales in May came in building materials, and garden equipment and supplies, which posted an increase of 1.9% following a decline of 0.3% in April. A survey of retailers by StatsCan on the impact of U.S. tariffs and Canada's countermeasures showed that 32% of retail businesses were impacted by the trade tensions in May, compared with 36% in April. The most common impacts in May were price increases, changes in demand for products, and increased expenses for raw materials, shipping or labor, it said, citing the survey. Sign in to access your portfolio
Reuters
6 hours ago
- Business
- Reuters
Canada's retail sales shrink as tariffs bite, June expected to improve
OTTAWA, July 24 (Reuters) - Canada's retail sales shrank by 1.1% in May as consumers curtailed car purchases and spent less at supermarkets, convenience stores and on alcohol, data showed on Thursday. Retail sales - closely watched by economists as they give an indication of GDP trends - had held up fairly strongly in the last two months, as concerns around the timing and magnitude of tariffs threatened by U.S. President Donald Trump brought forward purchases. But sales weakened as the impact of tariffs started hitting consumers and the general outlook around the economy paled. By contrast, an early or "flash" estimate showed retail sales likely grew 1.6% in June, though this figure is prone to correction, statistics agency StatsCan said. Analysts polled by Reuters had expected a drop during May, similar to what was reported, and barring autos and auto parts, which contribute almost 30% to overall sales, they had predicted a drop of 0.3%. Sales excluding autos in May were down 0.2%, StatsCan added. The biggest drop was posted in the motor vehicles and parts dealers category, where sales contracted by 3.6%, after two consecutive months of increases. The drop was led by 4.6% lower sales at new car dealers, which fell for the first time since February, it said, adding that in volume terms, retail sales decreased 1.4% in May. Another declining sector was food and beverages. This category, which contributes up to 18% of total retail sales, saw purchases shrinking by 1.2%, led by lower transactions at convenience stores and a decline in sales of beer, wine and liquor. Economists noted the expected rise in sales in June which could indicate that GDP might improve in the second half of the year, but said trade tensions are likely to keep consumer spending under check. "Unless a trade deal is reached to significantly reduce U.S.-Canada tariffs ... we expect households will continue to tighten their purse strings as job losses and higher prices from tariffs squeeze disposable income," said Michael Davenport, senior economist at Oxford Economics. The Bank of Canada will announce its rate decision next week and is likely to keep borrowing costs on hold, but most economists expect the central bank will need to start easing rates again to support the economy. The largest increase in retail sales in May came in building materials, and garden equipment and supplies, which posted an increase of 1.9% following a decline of 0.3% in April. A survey of retailers by StatsCan on the impact of U.S. tariffs and Canada's countermeasures showed that 32% of retail businesses were impacted by the trade tensions in May, compared with 36% in April. The most common impacts in May were price increases, changes in demand for products, and increased expenses for raw materials, shipping or labor, it said, citing the survey.
Bloomberg
8 hours ago
- Business
- Bloomberg
Consumer Spending Loses Steam in Canada as Auto Sector Slides
Canadian retail sales are flashing a warning sign of weaker spending by consumers who may be increasingly worried about rising prices and their job prospects. An advance estimate suggests receipts for retailers rose 1.6% in June, following May's 1.1% decline and April's 0.4% increase, according to Statistics Canada data released Thursday. Those figures point to a 0.4% increase over those three months, the weakest quarterly pace of retail spending in a year.
Bloomberg
10 hours ago
- Business
- Bloomberg
Tourists Tame Their Shopaholic Ways, If They Even Come to the US
Economics Inflation & Prices Some travelers are staying away from vacation hotspots, while others are rethinking their budgets.
