Credit Card Debt

Use a credit card to buy stuff. Don’t pay off the balance before the end of the grace period.

Voila. Now you have credit card debt.

Credit cards are convenient and can bring a lot of benefits (airline miles, cash back, Disney dollars, etc.). But they also come with high interest rates...more than 20% in most cases. Just pay the minimum payment, and it will take seemingly forever to pay off the balance. Assuming you aren’t adding to it each month, in which case it might take literally forever.

Bottom line: be wary of credit card debit.

And for much more on this hugely important topic, see our page on Credit Cards for the full Shmoop.