by Ben Luthi
If you're part of an average indebted household in the U.S., you're on the hook for $15,762 in credit card debt, according to a NerdWallet study.
You may be paying a $315 monthly minimum regularly, but keeping that pace could cost you more than $10,000 in interest and take you seven years to pay in full.
Minimum payments can obscure the true cost of credit card debt in both money and time. High interest rates plus long payoff periods add up to a huge expense, but you can reduce that burden.
The cost of the average credit card balance
Credit card issuers differ in the annual percentage rates they charge and how they calculate your minimum payment. Many Americans may carry balances across multiple cards from different issuers. For the sake of simplicity in calculating the cost of the average credit card debt, let's assume an APR of 16% and a fixed payment. We'll also assume a minimum payment of 2% of the principal balance of $15,762, the average as of the end of 2015, or $315.
Based on those terms -- and assuming you don't add any more to your credit card balance -- it would take 84 months, or seven years, to pay off the balance in full. During that time, you'll pay $10,402 in interest -- about two-thirds of the original balance -- for a total of $26,164. This averages out to about $124 in interest per month.
You may have an APR higher than 16% or a minimum payment that's less than 2% of your balance. In these cases, it will take you longer to pay off your debt and you'll pay more in interest. In fact, if we take the same scenario above but assume a minimum payment of 1% of the balance, you'll never repay the balance in full. Calculate your own debt costs here.
Tips to drive down the cost of credit card debt
The best way to eliminate credit card interest, of course, is to pay off your credit cards. Depending on your income and expenses, however, paying off thousands of dollars of debt isn't going to happen overnight. Here are some options to help you along the way:
Pay more than the minimum
Low minimum payments aren't a trap per se, says Rod Griffin, director of public education at Experian, one of the three major credit bureaus. "Low monthly payments can help you get through unexpected financial challenges by revolving the debt and subsequently paying it in full."
Griffin notes, however, that people can get stuck in a minimum payment trap if they use their cards to "support a lifestyle beyond their financial means and rely on making minimum payments to stay afloat."
You might be surprised at how much more quickly you'd pay off your balances if you paid more than the minimum. Let's take the same scenario above -- $15,762 balance with a 16% interest rate. By adding an extra $50 per month, for a fixed monthly payment of $365, it would take only 65 months and $7,869 in interest to pay off the balance. That's 19 months of freedom and $2,533 of interest savings for a mere $50 more a month.
Adding $100 to the minimum payment, for a total monthly payment of $415, will save you even more time and interest, with a repayment time of 54 months and total interest cost of $6,361. You get the picture.
Stop charging purchases
Continuing to use a credit card while you're trying to pay off the balance is like running a race by going two steps forward and one step back. Not only will it slow you down, you may eventually feel discouraged to the point of giving up. Suspend the swiping while you're paying down the debt, and you'll get to the finish line faster.
This step isn't easy. "It's often is a very emotional and stressful step, especially if the person is using their credit card to make purchases they otherwise could not afford," Griffin says.
Get a card with a 0% apr promotion or a low, ongoing interest rate
Some credit cards offer introductory 0% APR offers to encourage you to transfer your credit card balance. In cases where you plan to pay off your debt quickly, a balance transfer can be a great way to minimize your interest costs.
These cards generally have high ongoing APRs once the promotion is over, and you can still end up paying a lot in interest if it's going to take you more than a couple of years to pay off your debt. In that case, you may want to look for a card with a low, ongoing interest rate.
›› MORE: Getting out of credit card debt
While credit card debt may seem affordable if you focus on the low monthly payments, tallying up the total cost of your debt may be enough to convince you otherwise.
"When used responsibly, credit cards can be a very effective tool that enables financial flexibility," Griffin says. "But for some, credit cards may become a way to purchase items they cannot really afford in an attempt to live a lifestyle beyond their financial capability."
Using credit cards to live beyond your means can result in unmanageable debt. So before you swipe again, consider the cost of your credit card debt and how you can reduce it.
Ben Luthi is a staff writer at NerdWallet, a personal finance website. Email: bluthi@nerdwallet.com. Twitter: @benluthi.
This story originally appeared on NerdWallet.