Today I received my Credit card Statement. Now I do use my credit card for most purchases, but I always pay the full Balance before the stated due date. I make sure I never spend more than I can pay off in one month!
This means that using my credit card costs me absolutely nothing but does consolidate my spending, remove the need to carry large amounts of cash, and provide me with a monthly spending record.
This month the balance was $2,562.07, a bit more than usual which meant I checked everything carefully.
To my amazement I read that if I paid only the minimum payment each month it was estimated it would take me 21 years and 1 month to pay off my $2,562.07!
Intrigued as to this fact I investigated further and found that the minimum payment was $51.24.
If I chose this option how much would I actually pay!
So, I did the math!
$51.24 times 12 months times 21 years plus $51.24 for the extra 1 month equals $12,963.72!
$12,963.72 minus my original debt of $2,562.07 equals $10,401.65 in interest charges which is an awful lot of money to take out of my future pay!!!!!
In addition, I must remember that, since there will be an outstanding balance on my account every single little thing I buy will add to my interest charges from the day of purchase EVEN IF I MAKE SURE TO PAY OFF ALL NEW PURCHASES ON THE NEXT DUE DATE and do not add to my unpaid balance.
Currently I pay the account in full each month which means there is no outstanding balance and consequently no interest charges until after the due date. Carrying even a tiny balance means losing this interest free period.
Unquestionably these calculations make that splurge on all those lovely sale priced bargains seem very, very expensive!!!!
It seems that our much-loved credit cards can offer a fast track to perpetual poverty!!!!