| In fact, when used properly, credit cards are | | | | hate me. |
| a very powerful wealth-building tool! I use | | | | |
| credit cards for every single possible | | | | So why do banks go all out, giving freebies |
| purchase. | | | | and spend millions of dollars in advertising |
| | | | to hook you on using their card? They know |
| By using credit cards you get... | | | | that there are many consumers out there who |
| | | | just pay the minimum sum every month (about |
| 1) A two-months interest free loan | | | | 3% of the total debt you owe), because it is |
| | | | so tempting. What's worse is that many credit |
| When you buy a product using your credit | | | | card owners don't even pay their minimum sum |
| card, you will only be billed for it at the | | | | on time because of a cash crunch or because |
| end of the month. You are then given another | | | | they plain forgot. |
| month to make payment. So, if you pay off | | | | |
| your total bill, you would have effectively | | | | The moment you pay only the minimum sum and |
| gotten a two-month interest free loan. | | | | allow your outstanding balance to roll, you |
| | | | become the bank's best friend. This is when |
| 2) Bonus points and dollars | | | | they will make a killing off you! Why? This |
| | | | is because banks charge a 2% per month |
| Each purchase you make on your credit card(s) | | | | interest on your outstanding sum. This may |
| will earn you bonus points which you can use | | | | seem small, but again, that's 24% interest a |
| to redeem for free products and services like | | | | year. Just how much interest does this add up |
| extra flyer -miles and dining vouchers, | | | | to? Let's do the sums... |
| saving you even more money. | | | | |
| | | | Question: Imagine if you had an outstanding |
| 3) A monthly statement that tracks and | | | | balance of $2,000 on your credit card |
| consolidates all your expenses | | | | statement, and you just pay the minimum sum |
| | | | of $60, how long will it take for you to pay |
| At the end of every month, the credit card | | | | off the while balance? (this is only assuming |
| company will tabulate for you the total | | | | you do not charge a single dollar more). |
| expenses for the month, making it easy for | | | | |
| you to track your total expenditure. So it | | | | The shocking answer: It will take you 4.5 |
| becomes a free money management tool. | | | | years! You would have paid a total of $3,300, |
| | | | that's $1,300 in interest. In other words, |
| However, you MUST ALWAYS PAY THE OUTSTANDING | | | | you would pay an actual interest rate of 65% |
| BALANCE when you pay the full balance every | | | | off your balance. |
| month. This way, the bank does not earn a | | | | |
| cent off you, but you get the three great | | | | So when used properly credit cards can |
| wealth building services mentioned above. | | | | greatly assist you in creating wealth or it |
| This is what I do and that is why my bankers | | | | can destroy you if abused. |