What Your Debt Costs a Day

A yearly rate is a unit nothing is felt in. A day is the unit you actually live in.

Take one debt — the one with the highest rate. Find the balance and the annual rate in the contract or the app; if you can only see the effective rate, use that, it is the honest one. Do the sum: balance times the rate as a decimal (0.24, say), divided by 365. The number you get is what accrues while you sleep. Multiply it by 30 and by 365 and write all three figures side by side on one line. Now look at the daily figure and say out loud what costs that much: a coffee, a lunch, a ticket.

The daily figure usually comes out small and therefore infuriating: too small to panic about, too visible to forget. That is the useful state — anger at a specific number moves people better than general dread. If you could not find the rate because the contract never states it plainly, ask the lender for the effective rate in writing; they are required to give it. If you have no debt at all, run the same sum on a phone instalment plan or on an overdraft, where the rate is usually higher than it looks.