02 Aug Top Ten Personal Finance Mistakes – Part 4
Do not pay only the minimum payments on your credit card each month. When you pay only the minimum, the credit card companies maximize the amount of interest they earn on your debt.
Credit card companies make a tremendous amount of money each month on the minimum payments. They can change the price you pay after you’ve made your purchase. See Credit Card Issuers come under fire. They want you to stay in debt and making that minimum payments each month. Despite whast they say, you can have too much debt. To calculate your debt to income ratio, check out the Wall Street Journals spreadsheet. The secret to success is to pay off your credit cards in full each month. Never charge more than you can pay in cash when the bill comes in.
Better yet, keep those credit cards at home when you go out. Other tricks are to use Credit Card Condoms. This is a protective sleeve that reminds you to think before you charge. And if you’ve made those charges – pay them off. Make more than the minimum payment each month. Some experts suggest that you focus on paying the smallest account off first. This makes good sense because it is achievable and when that first account is paid off, the next smallest get easier to pay off. Soon, you are tackling the largest one.
Paid off those credit cards? Go on to Part 5, Save for Emergencies