Lesson 5 of 45

I came across this lovely piece on Fab after Fifty website. To celebrate growing older, Regina Brett age 90 put together 45 lessons life taught her. 

Here is lesson 5

5. Pay off your credit cards every month.

Credit cards are a great invention. But if not handled with care, a life time of debt awaits. 

Carrying a balance on your credit card simply means you are throwing away money on credit card interest, if you add the interest that accrues on the balance of your debt into account, over time that your credit card debt quickly grows. This often means that you may be still paying off that pair of shoes you bought in the sale last summer.  

Or worse paying only the minimum means you may never pay it off in full, as annual fees and compounding interest can keep this bubbling along for years. 

Credit card agreements say that if you’re late in paying the minimum amount for two months in a row or twice during a one-year period, you can face an annual interest rate of 25 per cent or more. Just think of the number of shoes you could have bought.

 Also paying on the due date means your payment won’t be credited to your account until the following day. Not only will you pay interest for the month, but you may have to wait an extra month to restore your interest-free period on new credit card purchases.

Oh and if you miss a few minimum payments you interest rate can shoot up, that’s because you’re seen as a deadbeat who’s likely to default. 

The great advantage of paying off your credit card in full means you won’t ever have to pay the 3% to 3.5% monthly interest on any outstanding balance that remain in the card and your bank balance will be so much healthier