Before I pay credit card interest…….
I have never paid a dime of credit card interest. It’s not overly hard for me, but I am sure it can be for others. I just spent $1000 on a new couch at a furniture store. I had the cash at the time in my checking, but it would have left me at dangerously low fund levels in that account, and I did not want to tap savings. So I charged it, and will pay it off in full when the bill comes.
Which brings me to another point; it would be so tempting for me to pay less then the entire balance off at once. I will be moving and incurring other unforeseen costs that go with moving, so maybe keep my cash reserves high by paying half the balance?
I of course could not would not do that. The introductory interest rates on the majority of credit cards are higher then any other type of loan: car, school or home. You might be able to get a loan off the street for less the some of the rates that are out there. The interest for a single month might only be fifteen bucks or so, not much right? If you do the math on that (15/1000*12) that is 18% interest on the year! With only five bucks put towards the balance. Money in savings accounts is earning well under 3% these days. You do the math on how much it is costing you.
The credit card companies are not bad people (some would disagree) but they want you to pay the minimum balance every month. That way you cover the interest and just a tiny bit of the principal. You would be paying this way for a long time, and making Visa very rich in the process. How else do you think they can afford to blanket consumers with advertisements?
Why do you think people do such economically foolish things? Is it purely a lack of will power, ignorance, or something else?