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\u00a9 Anna Webber | Getty Images<\/p>\n
A caller to The Ramsey Show earning $85,000 a year called in with two debt problems layered on top of each other. His own balance had started at $53,000. He told Dave Ramsey, \u201cI\u2019ve been listening to you, so I\u2019ve sold some stocks that I had in an ESP plan, and I brought my debt down to about $20,000.\u201d That is real progress. Then he explained the second problem: he had co-signed a credit card and a lease for his mother roughly six years ago during COVID, and the card still carried an $18,000 balance that had never come down.<\/p>\n
Ramsey\u2019s response was blunt. \u201cShe\u2019s never going to pay off the debt. COVID was 6 years ago. We\u2019re not going to sit around and wait on her.\u201d He told the caller to add the $18,000 to his own payoff list, refuse to renew as co-signer on the lease, and act on the card now: \u201cCancel the card. No more charges. Charges aren\u2019t allowed by anybody, you or her.\u201d<\/p>\n
The verdict: Ramsey is right, and the APR is why<\/p>\n
Financial mistakes do not define anyone. Cutting personal debt from $53,000 to roughly $20,000 by liquidating an employee stock purchase plan is proof of that. But co-signing creates shared legal liability, and the numbers on this specific card make delay dangerous.<\/p>\n
The average credit card APR<\/a> sits at roughly 21%, which the Federal Reserve data classifies as record territory. On an $18,000 balance at that rate, a typical 2% minimum payment of roughly $360 barely covers the monthly interest charge. That is why the balance stalled for six years. The card is being fed just enough to stay alive rather than actually retired.<\/p>\n Cancelling the card does two things at once. It caps the principal at $18,000 so no new charges compound at 21%. And it forces the caller to attack a fixed number rather than a moving target. Under a debt snowball approach<\/a>, which Ramsey has championed for decades, the caller would list every balance smallest to largest and throw every extra dollar at the smallest while paying minimums on the rest.<\/p>\n Co-signing is joint ownership of the risk<\/p>\n Readers often think of co-signing as vouching for someone. Legally, it is shared ownership of the debt. The Consumer Financial Protection Bureau has documented how deeply this cuts: almost half of individual credit card accounts belong to a credit-linked consumer whose finances are effectively tied to another person\u2019s. When one person stops paying, the other\u2019s credit score, wages, and future borrowing capacity are all exposed.<\/p>\n