I was a little shocked at reading some new stats about credit card debt and interest. I think you will find this interesting, too.
The average interest rate charged on credit cards is 18%. Wow!
When you consider that mortgage loans are approximately 3% now and that auto loans are about 2%, that is a huge profit margin. Let’s look at that in terms of dollars.
Credit card companies will make approximately $100 Billion in profit off of credit card debts this year. Staggering!
Personally, I do not want to give those exceedingly rich credit card companies one single dollar of my money. I hope you feel the same!
If you are carrying a balance month-to-month, I encourage you to do your best to pay off the remaining balance as fast as you are able, so you can quit paying 12% to 24% interest. Credit card interest is not even tax deductible!
Do not close down the account, even after you pay it off. Keep it open for the good credit score points. Then use it as a convenience, never charging more than you can afford to pay off each time the bill comes.
If you are not paying off your credit card balance in full each month, that tells you that you are charging too much. Look at where you might be able to cut back. (I understand there are exceptions, such as when your furnace goes out or your child needs braces. Those are necessities and justified charges. That is different than over-buying of clothes, tech toys, and entertainment.)
With inflation happening now, it is important to keep our debts under control. With the increase in grocery prices, I have been looking at how I can lower my own grocery bill. Maybe we can talk about that as a separate topic another time. I would love to hear your ideas.
Meanwhile, let’s all keep more of that $100 Billion in credit card interest in our own bank accounts.