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American Shoppers spent BIG on Christmas of 2017.
According to a report on the CNBC website, American Shoppers charged an average of $1,054.00 dollars on their credit cards during the 2017 Christmas shopping season.
Now, I don’t know about you, but as for me, that is a lot of money to be charging on a credit card for just one day of gift giving, not to mention, that this kind of spending can result in a huge financial headache for the New Year.
Here’s the breakdown:
Let’s say that the cardholder makes only the minimum payment of $25.00 per month on this particular credit card with a balance of $1054.00, with a15.9% percent interest rate.
Doing the math, this means that it will take 63 months (THAT’S A LITTLE OVER FIVE YEARS) to pay the credit card balance in full.
This means that FIVE Christmas’ would have gone by before you even finish paying for what you charged on your credit card in 2017!
THAT’S CHRISTMAS OF 2022!
Think of it… is that not crazy!!!
In addition, the cardholder would pay $499 dollars in interest charges, which is a total of 47% percent of the original $1054.00 credit card balance.
FORTY SEVEN PERCENT!!!
Now, as for me, I would much rather deposit $25.00 every month in a good mutual fund, and then, have the mutual fund pay me approximately 8% to 12% in earned interest every year.
Let’s take a look at those numbers:
- $25.00 dollars deposited every month for 12 months equals = $300.00 dollars per year
- $300.00 dollars times x 8% earned interest equals = $24.00 in interest paid to me every year
- $300.00 dollars times x 12% earned interest equals = $36.00 in interest paid to me every year
Now that’s what I call making your money work for you, and we haven’t even began to talk about COMPOUNDING, which is the real magic that makes your money GROW REALLY FAST!!
Let me ask you this question… would you rather PAY interest or EARN interest?
This is something to seriously think about before you go out and start charging up your credit cards without having the money to pay your credit card charges in full as soon as the credit card charges post onto your billing statement.
If you do not have the financial resources to pay the credit card charges in full as soon as the charges post onto your account, then you should not make the charge to your credit card.
Listen, credit cards are not the enemy.
Credit cards are a tool, and just like any other tool, if you are not careful, if you do not deploy best credit card practices, there is always the potential that you could get in some serious financial trouble.
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