Page 35 - Book1E

• You’re not sure what your account balances or interest rates are.
• You hope the mailman delivers an offer for a new credit card.
What should you do?
1. Avoid using the cash advance feature of your credit card. There is usually a fee charged per cash advance, and cash advances always have a higher interest rate than other purchases.
2. If you do use a credit card, treat it as though it’s a checking account. Keep a check register booklet with you and deduct from your checking account every purchase you make with your credit card. Spend only what you can afford to pay off that month. It will help you avoid accumulating a carry-over balance and interest.
3. The best solution of all is to use cash only.
Living within your means is hard, but
paying with cash will force you to do so.
After paying your regular monthly bills
with checks, determine what remains and
withdraw that amount of cash. Spend only
that amount for daily purchases or quick
trips to the store. By using cash instead
of a debit card, you protect yourself from accidentally tapping into money needed for your monthly bills. It may be less convenient to take money into the cashier instead of paying at the pump, but it is worth it if it helps you get out of debt.
Paying the Minimum Is Really Paying the Maximum
The minimum payment often sounds affordable and can make you feel you have more money available on a day-to-day basis. If you pay the standard 2.5% minimum monthly payment on a $5,000 balance on a credit card that is charging you 21% interest, it will take 33 years to pay off the $5,000—if you don’t add any
Too Much Credit
If you would be wealthy, think of saving as well as getting.
—Benjamin Franklin
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