Have you ever found that something that you just couldn’t live without? Maybe it was an amazing pair of leather boots? A nice new washing machine? Even something like a trip to Hawaii?
What about finding that special thing and paying for it on your credit card?
We have been there! But few of us actually stop to think about what it is costing us to purchase using credit when we know we won’t be able to pay off the balance. Before you get in too much trouble, STOP and figure out what the interest on your minimum payment is actually costing you.
For example, let’s take the example of a vacation. At this time of year, who isn’t dreaming of a sunny escape!? Lets say you’re looking at a $2,500 vacation to Maui. If you book it and plan to pay only the minimum payment at 18 percent interest you will pay $62.50 a month. It will take you 204 months, yes, 17 YEARS to pay off your vacation.
17 years of being in debt, 204 months of making the same payment. Are you wiling to pay that?
Not to mention that in that time, you will pay $3,173.22 in interest. The vacation that you thought was a steal ends up costing $5,673.
We aren’t saying that you shouldn’t pay on credit, but we are saying that you should ALWAYS pay off your balance.
Next time you are about to buy something using your credit card hop on over to this Minimum Payment Calculator and find out what it is really costing you.
{ 2 comments… read them below or add one }
The best way to save money is to NOT buy it. Don’t buy it unless it’s essential. Life is so wonderful when you don’t have debt payments to worry about. It’s so great to not to have to worry about paying off debt. Credit cards are such a mammoth ripoff with their 19%, or so, interest charges. Cut back on your purchases so that you have no credit card debt and at the end of the year you’ll have $19, or so, extra to spend on YOU.
Thanks to you guys, I did became aware of my visa bill, and did something about the interest rate!! I feel so empowered right now. Your blog and your book are really making a difference in my life. Thank you! Feel free to read the blog entry I wrote about this: http://elizaoverthemoon.blogspot.com/2011/05/visa-empowermentor-should-i-say-money.html