Pay It Off:

I like money, you like money, we all like money. Well here is a simple tip on how to save yourself money, pay off your credit card balance as quickly as you can. Almost every credit card will give you the option to pay off a new balance within 30 days and not have to pay any interest on it.

Example: You get a new credit card and charge a leather sofa on it for $2,000 on January 1st. On February 5th you get your statement with a balance of $2,000 and a payment due date of February 27th. If you pay the $2,000 in full by February 27th you WILL NOT be charged any interest. When you carry a balance on your credit card you are charged interest on that balance each month.

Credit card companies want you to carry a balance on your card. They want you to only pay the minimum payment due. This is how they make money. The longer you have a balance the longer then can charge you interest on that balance and the more money they make. They are in effect a legal loanshark.

Example:

If you have a balance of $5,000 and your interest rate is 15% then each month you are being charged $62.50 in interest. If your minimum payment is 3% (standard among most companies) then you would be paying $150. So really your balance will not decrease by $150 but by ($150-$62.50=$87.50). At this rate it will take you YEARS to pay off the balance and that $5,000 dining room set you bought will end up costing you double that in the end.