Misusing credit cards seems to be a norm, especially among college students. We use these plastic devices to pay our utility bills, buy shoes, clothing, gas and a bag of chips. Credit cards are used as money that is extended to consumers as a means of profit for lenders.
This money is not yours, you are borrowing it under certain conditions. The credit limit extended to you is a loan. Attached to this loan is interest, which is the amount charged in addition to the loan for the use of borrowing.
In addition, if you miss a minimum monthly payment the creditor will charge you a late fee. Think about this: If you max out your $500 credit card with an interest rate of 21 percent while paying the minimum $15 per month, how long will it take you to pay this balance off? It will take you approximately four years and three months. You will wind up paying $257.01 in interest alone, assuming you were never late.
If you cannot discipline yourself in making the right decisions with the use of credit cards, you do have a couple of options.
Consider the following:
*Cut the credit card(s) up and use cash
*Get a secured credit card through your bank or credit card company
*Use a debit card, but keep a balanced checkbook
Individuals who pride themselves in managing their money and credit wisely were smart enough to climb out of their credit entanglement. Lenders are finding effective ways to offer convenience to entice you to frequently use your card.
For example:
*Have you noticed how many fast food places now take credit cards? Now there is a conflict in terms, “fast food” and “credit card.”
*Did you know taxi cabs and parking lots now take credit cards? I hope it’s a deductible expense. The compound interest it generates, of course, is not.
*Movie theaters now report 25% of payment is by credit card.
Please don’t make the avoidable mistakes of over consuming with what you don’t have; remember this as you begin or continue your journey into financial prosperity: Satisfaction isn’t so much getting what you want as wanting what you have. There are two ways to be rich; one is to have great wealth, and the other is to have few wants.
Success Stories
In the Sept. article, I challenged readers to keep their spare change in order to understand that saving money is as simple as learning the ABCs. The following are a few success stories.
Temecka Davis, a junior political science student from Orlando, said, “In the article about how to save money, I followed the instructions on saving all your change. I was stunned to find that I saved a total of $9.52 in about two weeks.”
“I was very surprised to have saved $26.89 in about 3 weeks by saving change. Saving money is truly effortless and I will certainly make it into a habit from here on out,” said Jessica Williams, a senior english student from St. Louis.
Contact Cherline Pierre at famuanbusiness@hotmail.com