Credit Card Debt
Credit Card Marketing Report # 12
Credit
Card Debt. If you were to know only one thing about credit card
companies and what they want, know that they don't want you to pay.
If
you pay them back and don't owe anything on your cards, then the companies
cannot charge any interest. Thus, they do not make a profit. However,
pay just a little bit each month, and they have a steady income based off the
interest of what you owe.
Revolving Debt-Different From
Mortgage Debt
The majority of credit cards employ a
method of what's called ‘"revolving" debt, just about all except American
Express and Diners Club cards, which must still be paid off in full every month.
However, for the rest of the credit cards out there, the system of
r revolving debt means that you can pay off as much as you like each
month. Or, you can just pay the minimum, and you can run up as much debt as you
want each month (up to the maximum of the card, of course).
Unlike a
fixed-term loan (a 20-year mortgage, for example), both the size of your
payments and how long you'll have to be paying them are variable. Each new
purchase can dramatically extend the time that its going to take you to get your
balance back down to $0.
This is why credit cards are so
profitable for the companies that offer them, and so expensive for
you.
A Dollar Today Is Less in a
Year
Though this is rarely realized, using a credit card
basically makes your money worth less than it would normally. This is why credit
cards seem so much harder to pay back – if you borrow a dollar from a credit
card at 15% interest, sit on it for five years, and then give it back, you still
owe a dollar!
This is because the dollar you gave them back only repaid
the interest which built over those five years. This is key advice to understand
about credit cards, since it means that the last thing you should do is leave
this debt to be paid off later.
A Helpful Mind Trick
Since at
some point you will have to pay off the interest on your credit card debt, use
this simple spending perspective to understand the value of avoiding debt. Start
by adding your cards' yearly interest rates to everything you buy when you're
thinking about the price.
Then, decide if a thing which is normally
worth $100 to you is actually worth $115, since there is 15% interest added. In
a similar fashion, take off the interest you get on your savings as a mental
discount. Thus, you'll be able to value the advantages of using savings as
opposed to debt more easily.
If you're a real estate agent, broker, mortgage broker,
loan officer, or financial adviser interested in pre written articles and
reports like this one you might like these:
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Credit Card Articles and Marketing Reports by clicking
here
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Buyer and Seller Articles and Marketing by clicking
here
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Real Estate Articles and Marketing Reports by clicking
here
All of them can be used for web
site content, special
marketing reports, articles for auto
responders , as newsletters, articles for newsletters,
etc.
Click here for information about bad
credit repair!
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