Credit Cards: Bad Habit That Wastes Av $$$$
Fri Nov 14, 2008 1:52 pm
Are you one of those with the bad habit? No, not airplanes, we all have that habit and at least it is fun, keeps us young.
The bad habit I mean is throwing your money away on credit card interest. I saw on the news that 50 million people carry a balance on a credit card. You've got better odds at Las Vegas, at least some people do win at times. Now consider this, over a long period of time, about the average gain in the stock market was 10 or 11%. That is not even taking into account the last big crash. Most credit cards charge 20 or even 27% interest. So you can earn at 10%, of could for a previous period, and you are going to incur interest charges at twice that rate or more. Gonna be hard to make that up on volume. And interest is not the only cost the banks throw at card holders, there are over limit and late fees. And now they are raising their rates. And who is most likely to carry a balance? The people who can least afford it. I don't think Warren Buffet got that way by paying 27% interest plus fees on borrowed money. There are some cards that give you airline miles or even a small cash rebate, but it only makes sense if you don't carry a balance.
I expect there may be more regulation of such high fees in the future, but it won't be here yet, so maybe this view can help someone.
The bad habit I mean is throwing your money away on credit card interest. I saw on the news that 50 million people carry a balance on a credit card. You've got better odds at Las Vegas, at least some people do win at times. Now consider this, over a long period of time, about the average gain in the stock market was 10 or 11%. That is not even taking into account the last big crash. Most credit cards charge 20 or even 27% interest. So you can earn at 10%, of could for a previous period, and you are going to incur interest charges at twice that rate or more. Gonna be hard to make that up on volume. And interest is not the only cost the banks throw at card holders, there are over limit and late fees. And now they are raising their rates. And who is most likely to carry a balance? The people who can least afford it. I don't think Warren Buffet got that way by paying 27% interest plus fees on borrowed money. There are some cards that give you airline miles or even a small cash rebate, but it only makes sense if you don't carry a balance.
I expect there may be more regulation of such high fees in the future, but it won't be here yet, so maybe this view can help someone.
Tue Nov 18, 2008 7:45 am
About 8 years ago ( I was in my mid 20's) I spent a long weekend thinking about the things that I want to do/accomplish in life. Of course alot of those things were aviation related. I realized that being good looking instead of wealthy 
was not going to make it happen for me unless I got pretty serious about my finances.
Killing off all my credit cards but one was a first step. Actually establishing different savings accounts for things I wanted to do was another. The result? even on a fairly modest salary at times I have been able to save enough to own 2 nice airplanes (172 and warrior) and now I'm looking to trade in on a nice Bonanza.
Wishing just isn't gonna make it happen. You have to be proactive to get results. It's your life.
was not going to make it happen for me unless I got pretty serious about my finances.
Killing off all my credit cards but one was a first step. Actually establishing different savings accounts for things I wanted to do was another. The result? even on a fairly modest salary at times I have been able to save enough to own 2 nice airplanes (172 and warrior) and now I'm looking to trade in on a nice Bonanza.
Wishing just isn't gonna make it happen. You have to be proactive to get results. It's your life.