Tuesday 24 November 2020

Credit Card Debt Freedom Anniversary

So, since my payday was on Sunday, and Monday’s blog was about the update on my Grand Savings Plan, today I get to talk about another, yet special anniversary of mine.

For it was on my payday of November, 22, 2015 that I paid off the last of my credit card debt. 

This was huge as I had been carrying a balance on 3 maxed out cards for years, about five years to be honest.

I was in perpetual stress trying to simply feed the beast that is credit card debt. Strangely enough, yet not unexpected I would suspect, paying of the credit cards was the hardest debt to do.

Credit cards are an unsecured form of debt, meaning that there is no big fat asset securing the loan, such as a house or a car.

What that means is that it is a greater risk for the bank. (Note you do not borrow money from the credit card company, but rather the issuing bank).

Since the loan is of a greater risk they get to charge more interest to make it worth their while (Usually around 20% no matter what the Prime Rate is).

That is why the minimum payments (which are almost exclusively interest) is so high, and why you never seem to be able to get ahead, because you are always paying interest, high interest.

So this is why I take a moment to pause and be thankful for paying off the last of the credit card debt that I had.

I still have credit cards, but I keep them at a zero balance, since I pay them off in full each and every payday.

Credit card debt is evil because there is no end date on that debt. With a car loan or a mortgage there is an end date, eventually. 

With credit cards, you can keep paying and paying and paying for years for a relatively small debt. 

This is why I always say pay off your credit cards as soon as you can and keep them paid off. Keep them, use them, but do not carry a balance on them. 

As always: Keep your head up, your attitude positive and keep moving forward!

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