Saturday, December 18, 2010

What Credit Card Companies Don't Want You to Know. Adoption Day Again.

Here are a few things that may save you money on your credit card bills:

"If you have a balance closer to $7,000, like many households, making only the minimum payments mean it'll take you 50 years to be debt free.

But it's unlikely that you have taken the time to figure out how long that payoff will take. If you make minimum payments on a $2,500 balance at 18 percent interest, it'll take you 34 years to pay it off. By then, you'll have paid out $6,431 in interest on top of the original $2,500 bill.

If, instead of paying $200 a month on credit cards for 25 years, you invest that money at 12 percent interest, you could retire in 25 years with $1.3 million.

Minimum payments are forever.
Making only minimum payments can affect your finances for the rest of your life. The bottom line: Pay off your debts as soon as possible.

Most credit card companies set minimum payments at 2 percent to 2.5 percent of the balance, or a minimum of $10. That means the minimum payment might be as much as $140 on a $7,000 bill, but it shrinks slowly as you chip away at the debt, stretching out the time to completion.

How much difference does it make to pay a little extra beyond the minimum? It's amazing. In the earlier $2,500 example that would take 34 years to pay off, the minimum payment would start at $50 and gradually drop. But if you continued paying that same $50 a month instead of the shrinking minimum, the payoff would take you about eight years instead of 34.

And if you paid $75 a month? It would take less than four years. $100 a month? Only 2 1/2 years (in all cases, assuming you made no more purchases on the card). "
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"Do I know how to use a credit card?

"What a silly question! Of course I do. You just hand it to the clerk whenever you want to buy something and sign the receipt. Make the minimum payment and you can get lots of free credit. And don't worry if you max out your card. The company will probably raise your limit, and you are likely to get more offers through the mail for more cards than you can possibly use."

Does this sound familiar? It should. It's the approach millions have taken when using those little plastic cards that make purchasing items so simple and easy.

However, this common financial practice costs many families dearly. According to a recent report, the average American consumer now owes $7,000 of credit card debt—an amount sometimes referred to as "revolving credit" because many consumers typically pay only the interest and a bare-minimum amount of principal and thus never fully repay the entire sum.

How to use a credit card

After you've paid off all your credit-card debt, it's time to consider how such cards can be properly used. They are extremely convenient tools—attested to by the fact that people charged more on credit cards last year than they spent in cash—but the wise use of credit cards is important. How do credit-card-savvy consumers use their cards?

The most important step in responsible credit-card use is to completely pay off the bill every month.
Think of the credit card as using cash that is reserved each month for the items charged. This way no interest accrues, and credit cards become legitimate and helpful financial tools.

They become our servants instead of the other way around.

Most people don't realize that God has much to say about how we use our money. As our Creator, He is the One who gives us the power to earn money and enjoy what it can buy (Ecclesiastes 5:18-19). In a parable of the coming Kingdom of God, Jesus Christ described Himself as giving His servants money (talents) to manage. How His servants managed those funds determined their reward in the Kingdom (Matthew 25:14-30).
What's the lesson of this parable?
The way we manage our money reveals to God much about our character.

Biblical guidelines for financial stability

Since God created us, He understands how we think and operate.
When it comes to finances, God reveals in His Word a simple but profound truth: "The rich rules over the poor, and the borrower is servant to the lender" (Proverbs 22:7)."
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The sun came out, but it was chilly sweater weather.

Side-finished Ray installed the water tank filler, so that side is done.

After getting some of the running light wires up out of the way, Jay measured and cut the next sheet of paneling.
This second sheet was easier as it has just one outlet in it.
But we haven't install it yet.  Other interruptions stymied that.

Another SPCA foster mom, Chris, who lives near me, picked up Paco and Patches for Adoption Day.  Patches darted  in to her hidey hole as soon as she saw the carriers. 
As Chris was going to bring the foster critters back here, I didn't send Patches as she gets very stressed, and afraid of strangers.  When she is here at home, she is a little extrovert.

Then I realized that I was supposed to meet my SPCA boss, Kenya, as she was going to get some pictures of my foster animals out of my camera and in to her USB stick.   But we couldn't do it, as she had forgotten her UBS stick, but we found a way around that.  When Kenya sends pictures of our adoptable pets to the local newspaper, the pictures have to be enormous, and the paper resizes them.     Sorry, I don't know all the proper lingo. 

Jay wanted to go into the next town with me, so we went to Lowes for parts, Krogers for a few groceries, and picked up Paco and Prime.  The traffic was terrible, and I don't want to go back to Conroe until after the holiday!

Maybe, this old great grandma will get the hang of all this computer and digital camera stuff one day!


Mike said...

We pay for almost everything, even some of our monthly bills, with a credit card. $20 in cash will last me two weeks and we almost never write a check anymore.

When the credit card bill comes due, we pay it in full.

Along with not having any interest to pay, we earn several hundred dollars worth of "rewards" by using our card this way, which we usually take in the form of gift cards.

LakeConroePenny,TX said...

Thank you for your comment, Mike.

I, too, earn lots of credit card rewards which allow me to get savings on materials at Lowes and Home Depot. I could use them at many other stores, but those are the ones I use the most.

It is another ploy by the credit company to hopefully get you indebted to them, so they can charge their terrible interest rates.

As long as we beat them at their own game, and pay it off monthly, it is like FREE money.

Happy Trails, Penny, TX

A couple of newer paintings 2019 said...

I have always paid off my credit cards monthly, thank goodness! I can't imagine getting into that kind of debt.

You are so far ahead of people your age when it comes to computers and technology. My sister who is younger than you are hasn't a clue how to turn one on! You should be proud!

LakeConroePenny,TX said...

Thank you for your comment, Sandra.

I have had to struggle to learn how to operate this thing all on my own, so I just had to work out what is the easiest for me.
That is one reason I haven't changed the look of this journal in over 1000 days, as I am scared I would mess something up!

Happy Trails, Penny, TX