You may be wondering, how can these credit cards offer so much? Where is the money in it for them? Credit card companies make their money through a simple trick, your “credit limit.” That’s right, when the consumer falls for this game of “I can spend up to my limit on my card each month…” they are just giving away years of hard earned money to these companies. I cannot stress this enough, stay out of the downfall many people find themselves in, as they try the credit card game.
ALWAYS PAY YOUR BILLS IN FULL. DO NOT GO OVER BUDGET. DO NOT PAY ANY INTEREST RATE CHARGES. ALWAYS PAY YOUR BILL IN FULL!
If you haven’t gotten it so far, I’m telling you, don’t charge it if you can't afford it. Credit cards are not free money. Your credit limit isn’t how much money you have; rather, it how much they want you to spend. The credit card company figures it is a safe bet that you can't repay that money back in time. Expecting that, they will gladly lend you that money, sometimes at a rate 26%. And then, with the credit card maxed out, you will spend a long time paying them back for it, way more than you you’d realized when you fell for it.
Well how much can I spend on my credit cards, you ask? Its simple; as much as you make after putting away money in savings, aka your Discretionary spending. Maybe its only $300, maybe more, but that's it.
Wanna see how quickly you can go overboard? Below shows a large balance, check out how long it would take to pay it off with the minimum payment.
Boom! if you only pay the minimum payment it will take you 25 years. 25 years! That’s insane. What is even crazier is that you aren’t just paying the amount you took out, its the $15,000, plus interest, a lot of it. Which means if you only pay minimum payments you are going to pay out $36,000 over the course of the 25 years. And, that is only if you never use the card again, which honestly you shouldn't do at this point. If you have done this before you know what I am talking about. Possibly, you should never get a credit card again. Or you can learn from your mistakes and this article, and always treat your credit card as a debit card and only spend as much as you have.