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