As appealing as it may sound to have a credit card to use and make purchases with, it can be a way to get yourself in debt much faster than you would have ever imagined. If you were to use the credit card and made a purchase that used up all of the limit say about $2500 you would have just put yourself in that much debt. In all likelihood, you used the card because you did not have the money on hand in the first place. However, you will get all excited because you will only need to pay $50 per month in order to be able to own the new item. But what you do not realize is that you are really only paying the interest you owe on the credit card and very little towards the principle, this means that it could take you up to 334 months at 18% interest to pay off the new item.
Joseph Leonard is a registered Investment Advisor in North Carolina, author of The Retirement Vault and founder and CEO of the Financial Management Company in North Carolina, Coastal Financial Associates.
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