Here’s the truth about credit card costs: if you don’t pay your balance in full each month, you could pay twice as much for the product you bought than if you had paid cash.
If your credit card is charging you 20% interest, and your buy a $1,000 item, and if you only pay the interest each month and don’t pay the principal, you will pay $200 in interest each year. If you carry that balance for five years, your $1,000 purchase will cost you $2,000!
Today’s tip is simple: pay cash, or use your debit card. If you do pay with your credit card, pay off the balance at the end of each month. If you must borrow, get a bank loan or debt consolidation loan at a lower interest rate to pay off your credit card so that you are not carrying a balance. If you don’t qualify for a lower interest rate loan, file a consumer proposal, but in any event don’t carry a balance on your credit cards.
