You may have heard about good debt or bad debt. Debt is a very negative term but when used to leverage something that will increase in value it’s a good thing. But there’s one type of debt that’s always considered bad, and thats credit cards. And here are 3 reasons why carrying debt on plastic is not a wise move.
Double Digit Interest
Credit cards are expensive, and the most expensive debt you can take on, with annual interest or APRs in the teens, 20’s or even higher — while, mortgage and personal loans generally charge interest much much lower.
Minimum payments will take you years to wipe the slate clean
If you want a good laugh — or scare — check out that minimum payment warning on your credit card statement. It tells you how many years it’s going to take to clear the card at the minimum payment. Which is more than likely, not in your lifetime.
If you’ve got debt on a credit card, pay it off as quickly as possible and always pay more than the minimum to save yourself time and money.
It’s too easy
Would you buy that extra 4k Ultra HD drone you don’t really need if you had to count and physically hand the cash over? Possibly not.
So should you cut up all your credit cards?
No, but long story short, just clear them each month before the interest starts building up. I put most of my expenses on credit cards as I also earn air miles from doing so, but I make sure I start each month with a clean slate and no additional interest costs.