Many of us have credit cards for the convenience. Most cards today come with rewards (such as points/miles that are good for "free" gifts). In addition, cards often come with bonuses, like zero interest rates for the first six months.
All of these bells and whistles make credit cards seem very attractive. But you need to be careful with how you use your credit. Here are five secrets the credit card companies don't want you to know:
You spend more when you use a credit card. On average, people spend double when they pull out the plastic. Don't believe it? Think about this: if you went to the mall with your credit card to buy clothes for school or work, how much would you spend? Now do the same thing, but only take cash with you? Do you think you would spend more or less? I can almost guarantee that you would spend less if you only had cash.
You even spend more when you use a credit card at a fast food restaurant. That's why all those places have installed credit card readers in recent years. You'll probably only spend 50% more on your fast food, but that's still more than you would have spent with cash.
The average person with credit card debt pays more than $1,200 in interest every year. Last year, the credit card companies racked up more than $14 billion in revenue from interest. Are you getting $1,200 worth of rewards every year from your cards?
11% of Americans have had debts get to the point where a collection agency became involved. Isn't that a sure sign that you're in over your head and that something needs to change?
If you only make the minimum payments, a $1,000 charge will take 22 years to pay off.
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