In this scenario, we will assume that you credit card has a very average interest rate of 18.9% and that you will pay $150 per month. Your $5,000 balance becomes over $10,000! Over the duration of time that you are paying down the balance on your card, you will end up paying more than twice the amount that you originally spent. And on top of that, it will take you over 17 years to pay down a very small debt of $5,000, and this assumes that you immediately stop using your credit card.

Perhaps even more alarming than the fact that it will take you nearly two decades to pay off $5,000 is the fact that most of the debt won't go away until the end of the 17 years. This is because of something known as loan amortization. Basically, toward the beginning of the loan, most of your payments go toward the interest on the loan, not the debt itself. Each subsequent payment shifts toward paying a little less interest and a little more of the loan itself. Your loan payment shown in a graph actually looks a little bit like this. After 13 years of paying off your debt, you will still owe more than half of the total.