Your Debt Card!
They should probably rename your not so trusted credit card a debt card!
Using it in a reckless manner and, if you only pay off the bare minimum each month will no doubt keep you in debt and possibly poverty.
As an example, let’s take a typical credit card with an APR of around 22%.
Let’s imagine you receive your monthly statement, showing you are £1,600 in debt.
With interest charged at 22%, the minimum monthly payment will be around £40.
Quite staggeringly, of that £40, an incredible £30, or 75% of your payment will go towards interest!
Therefore, in effect, only £10 will go towards reducing your debt, leaving you still in arrears of £1,590.
In this sort of frightening situation, the best thing you can do is to try and pay off this crazy debt as soon as possible.
In future, if you fancy something, then make sure you can pay for it with cash before commiting yourself to this purchase.
Ask yourself, “is this purchase really necessary? and is it money well spent?”
Aled Evans
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