I was in a department store over the weekend and had to laugh at the checkout. The clerk was amazed that I refused to save 20% off my purchase by opening a charge account. What he fails to realize is that that 20% savings, turns into a 29% interest rate on their charge card!
I just paid off 4 store charge cards that my wife likes to use. The charges were all between 24-29% interest rate! He logic used to be like that of the store clerk, I’m getting 20% off or 30% off by using the charge card. But when the bill doesn’t get paid in full, 29% interest is added on for that month!
We have 2 more store charges to be paid off and then I am done with these cards. It doesn’t matter that I can save 20 or 30% even 40%, when they make it up on the other end. Interest being paid for “consumables” is never a good idea. Interest should only be paid on something that can make us money – real estate, a house, a delivery van, a commercial lawnmower. Always think in therms of if this could make me money or not.
Money is a means to get you further ahead but only if used properly and to your benefit. Learn the principles of money management and it will carry you far in life.
By Tom Larsen