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CREDIT CARDS DEBTS How much are credit cards really costing you? Most people have many misconceived ideas about credit and what we are about to say will probably go against "conventional thinking". You might find some of it tough to believe or that it goes against what you have otherwise been told. So, if changing your beliefs about credit and debt is something you are not willing to do, please skip this page. Firstly, realise that credit is not there to help you in any way, shape or form. It is not there to improve your life or make things better for you. It's not there to help you furnish your first house or buy your first car. It's there for one reason, to make money for the credit card companies and it does this by draining you of all your hard-earned money for the rest of your life. Credit is a well designed and carefully laid trap that makes the credit card companies millions of dollars yearly. Remember that credit card companies do not make any money unless you are in debt. What most don't realise is that credit is a product that is being sold to you just like any other product. When you walk into a car dealership, you expect that someone is most likely going to try and sell you a car; or when you go into a clothing store, a salesperson is going to try and sell you a new outfit. The product that banks are selling are not checking or savings accounts but DEBT. The main goal is to issue as much debt as possible and it comes in many forms; credit cards, mortgages, car loans, student loans, renovation loans and many other types of secured and unsecured debt instruments. Many people get so caught up in making monthly payments that they never look at what would happen if they cut the credit out of their life. Credit cards' interest is much worse than most people think. To give you an idea of how credit cards are costing you thousands of dollars, let's take a look at a typical card. Say you spend $10,000 on a 24% interest credit card with a subscription fee of $100. If you make only minimum monthly payments, it would take you 8 1/2 years to clear and the whopping total amount of $17,000. That means that you have just paid extra $7,000 to use $10,000. You have spent almost 2 times the original cost of the item you bought. Now if you had waited until you have accumulated the cash before purchasing, you would most probably be able to buy a better one for a much lower price that will inevitably come out next year! Instead you're stuck with payments, payments and yet more payments. How often have you walked into a store and seen a price tag saying "only $50 per month". You think, this is great, I can afford $50 per month. But if you calculate the total price based on the monthly payment, you will realise it is about 2 times the cost of the product. Next time you buy something on your credit card (we would recommend you start calling them debt cards) remember how much extra money you're handing over just for the privilege of having it now. The reason we are telling you this is to get across the fact that credit is not a wonderful thing that helps you live a fuller, richer life. In fact, the truth is exactly the opposite. It drains you of every cent it can - leaving you broke. You need to eliminate your debt and stay away from credit. It's a hard thing to do and getting rid of your cards can sometimes be an uncomfortable experience. However if you want to become financially free, this is what needs to be done. The myth that you must have a large income to become wealthy is not true. Many people are discovering that lowering unnecessary interest is the first step to financial freedom and a better way of life. After saying all that, we do agree that credit is good in some situations, such as obtaining a mortgage to purchase a home. It can be hard to buy a house without borrowing money. Even then, most people, if they set their minds to it and pay down their other debts, could eliminate the mortgage in a few years. Imagine that, having no more debts and having your house free and clear. How would that feel? There are some people who have credit cards and they do pay in full every month. If you can do this, well done! You are the exception to the rule. Most people start off with that intention but due to unforeseen circumstances, it eventually lead to delay of a month's payment and this is how the cycle begins. Unfortunately it is human nature that should we have excess money, there will always be something we need. It has been proven scientifically that paying with a credit card generate less hesitation as compared to paying with cash. It is the same principle as to why casinos use chips rather than cash. The best thing to do is to use a Debit Card. Then you are actually spending only money and not your future happiness.
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