Now that debt is considered a problem, the next issue is how to get out of it.

Before you can address the problem, an understanding of compound interest is essential.  It's so amazing, it is a miracle!

Compound interest means that interest is paid on interest as well as the original capital amount.  This can work for you or against you.

Some examples to illustrate this:

The average balance on a typical credit card is £2,268.  A typical annual interest rate is 19.9%.  With terms that say that the minimum monthly repayment is 5% of the outstanding balance or £5, whatever is the higher, it would take seven years and 10 months to clear paying £3,215 in total, almost £1,000 more in interest!

Some cards now require a minimum repayment of 3%.  The above example, it would take 18 years and 10 months to clear paying £4,505 in total, almost an additional £2,300 in interest!

A 2% minimum repayment would take 46 years and six months to clear paying £8,952 in total, almost an additional £6,700 in interest!

Remember, it can work for you as well as against you.  If you save £100 per month at a 5% interest then it would be worth £6,814 in just five years.  It would be worth £15,518 in ten years and £40,940 in 20 years.  A miracle!