Credit: Your Credit Card

BOSTON (CBS) - We certainly do like our credit cards! The latest Federal Reserve numbers from February has revolving consumer debt at $957 billion dollars.

According to Value Penguin a financial website, (where do they get these names), average credit card debt for Massachusetts residents last year was $5,700.

Credit is a privilege, not a constitutional right despite what some people may think. Credit allows you to use someone else's money, usually a bank, to buy the goods and service you need or want.

You are borrowing money every time you use your credit card and you do need to eventually pay it back. And if you don't pay off your balance every month, the credit card company will charge you interest for using their money.

And if you are late in paying your monthly bill, and about 20% are, the credit card company has the right to charge you late fees. Now 20% may not sound like a lot of folks but it's about 170 million accounts. $27 is the average first time late fee, late again could go up to $38. Credit card companies earned over $11 billion in penalty fees last year.

When you talk about credit you need to talk about debt. There is good debt and there is bad debt.

Good debt is the kind of debt that eventually increases your bottom line, your net worth. A mortgage would be considered good debt for it helps increase your net worth.

Bad debt is your credit card debt that you don't pay off in full each month. And over 60% of consumers have at some time last year carried their debt month to month.

If you carry a $3,000 balance with a 14% interest rate, and you pay only the minimum each month it will take 20 years to pay it off.

And it will cost you over $3,500 in interest over those 20 years. Credit card companies just love it when you only pay the minimum.

One more thing: Last year John Oliver, a very funny man who hosts an HBO show Last Week Tonight, did a super job explaining the pitfalls of credit. It is about 16 minutes long but something everyone should watch. I now show it all of my classes. He nails it!

....................

You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee's Money Matters newsletter here.