Credit Cards.

Be warned Does the credit card work for you or do you
work for your credit card?

Most people's answer to that question will depend on
how they treat their "old plastic" as credit cards are
known.

For many with burned fingers will tell you they didn't
realize that things had gotten so bad until very late,
because most credit card offers try much to sound like
they are actually running a charity. Well, they
aren't.

And this is not a hate campaign against credit cards.
Surely they have their benefits - in America if you
want to rent a car, you got to have a (major) credit
card.

But, consider this scenario: You receive an offer in
your mail that sounds good, maybe it's a new
generation TV or a fridge. But it costs $2000. Oh, but
you have a credit card with a $5000 limit, and you
immediately purchase your merchandise.

Typically, here is how your repayment schedule will
play out. Most credit cards charge a minimum of total
balance (usually 2 percent) of the total per month.

Assuming the interest rate is 18 percent and you
choose to repay the minimum amount of $40, $30 of that
will go towards interest and only 10 percent towards
the principle.

As a result, you will take 30 years to repay and end
up paying over $5000 interest.

Sounds scary? It doesn’t have to be. The moral of the
illustration is: Use the credit card the same way
porcupines make love; very, very carefully.