Debt comes at a cost, and not just the obvious one. Luckily, there are tools available to consumers to help them understand and prepare for the true cost of debt. To put it simply, your cost of debt is the total amount of interest paid of the term of a loan or credit card. This interest is the actual “cost” of the debt to you, the consumer.
Completing these simple calculations is imperative before taking out any new line of credit. The folks over at Fundera have summed it up quite nicely in their recent article. If the true cost of your debt is outweighing your ability to make payments, it may be time to seek help from a licensed debt consultant.
