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7.2 BASIC CREDIT CARD AND LOAN MANAGEMENT
7.2.1
KNOW HOW MUCH YOU ARE PAYING FOR EACH CARD YOU CARRY
Go
through your old statements and add it up all the charges; include membership fees and any
extra charges such as late fees. Many people are getting gouged without realizing
it.
7.2.2
ALWAYS PAY MORE THAN THE MINIMUM EACH MONTH
If
you only pay the minimum, you will pay a small fortune because your payment goes mostly
for interest and very little for principle.
For
example, paying only the required payment on a $3000 balance at 17.9% interest with no new
charges, comes to almost $3700 interest over 16 years! However, paying just $25 more a
month, will take you only 6 years with about $1500 total in interest.
Credit
companies deliberately make their payments small so that you will pay more in interest and
not worry about adding additional charges onto your balance. These and other actions by card companies, like varying interest rates, can lead to credit trouble. If you fall behind, take action and repair bad credit, early, to save yourself from future credit related woes.
7.2.3
STORE CHARGE CARDS MAY HAVE THE HIGHEST RATE OF INTEREST
It
could be as much as 22%. Cancel all these cards and transfer the balance to your regular
charge cards. Almost all stores accept Visa or MasterCard these days, anyway.
7.2.4
CONSIDER GETTING A REGULAR LOAN FOR AN APPLIANCE OR BIG TICKET
ITEM
A
loan with regular standard payments will often be paid off sooner with less money paid to
interest, even if the loan interest rate is a bit higher than one of your credit
cards.
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