Whats in your wallet?

Don’t you love those commercials? They just make you want to go online and apply for a shiny, new Visa, Discover or Mastercard. Well, not me, for sure! Maybe you but before you click on that link, let’s understand a few things. Ask me and I’ll say you can do just fine without them or the very month you don’t pay your balance off in full should be the very month you cut them up and never, ever use them again. That piece of advice can save you hundreds, maybe thousands of dollars in interest payments. What else should you know?

• Fees for making a late payment average $39. Not only will this fee be on your next bill but they can raise your interest rate as well.
• Going over your balance, which is common with many credit card users, will result in an over-limit fee which can range between $30-$39.
• While the standard credit card rate is around 13%, some card issuers are charging borrowers at a 30% rate.
• If you need a cash, using your credit card is probably not smart. Cash advances are followed by higher interest rates and with no grace period meaning the interest starts immediately.
• Behind on payments with other lenders? You fall under the “universal default clause” which means they can raise the rate, without informing you, because of your “missed payments” with other creditors.

Credit card debt is on the rise. Most of the time dealing with credit cards is like playing with a poisonous snake, sooner or later they will bite. I choose to use cash rather than plastic. The problem is many people use plastic irresponsibly and set themselves up for over-limit fees, late fees and high interest rates. Making minimum payments will keep you in financial bondage until retirement if you don’t get aggressive, stop careless spending and refuse to be a servant to the mighty credit card. Read the fine print to avoid all the “gotchas” that are legal yet damaging to your financial health.

Proverbs 4:7

Credit card talk

The power of borrowed money. What is it about that plastic card that causes us to swipe our way into a sea of debt. Credit cards aren’t evil and its not a sin to use them. The love of money is the root of all evil just like the misuse of credit cards is the problem, not the credit cards. Don’t get me wrong. I don’t use credit cards and I never will. I will encourage people not to use them because they do cause many to end up spending more money than they make but that doesn’t automatically make them evil.

Studies by Dunn and Bradstreet found that on average you spend 12-18% more when making a purchase with a credit card rather than using cash. If you really think about it, it’s much easier to swipe your card than it is to give cash at the register. Emotionally, you are more attached to cash thus resulting in you spending less. It’s a connection with your money that hurts when you let it go. Also, most people carry around a set amount of cash to spend, with credit cards its a better chance you will spend more on impulse. If you only have $100 cash, that’s all you will spend. With your credit card you have the opportunity to spend more than that set $100 and more often than not, you will spend that extra money.

There are people who use credit cards and pay them off in full monthly. I have no issue and appreciate the ones who do that for being responsible and not making the credit card companies rich off interest payments. If you can’t pay off your credit card in full each month, you should not have one! You are making the credit card company rich while digging a deeper financial hole for yourself. Don’t put your future wages into the hands of companies that can raise your interest rate without notifying you and stick you with legal over-the-limit and late fees costing nearly $40 a fee.

So what’s in your wallet?