Credit card Christmas, or CASH Christmas

First and foremost, I would like to say that I am just as guilty for using credit cards.  I started in university with my first credit card, did not use it properly, to the point that when I got hired in my first year at the bank, was not even approved for their employee credit card, because I had been so irresponsible the first time with a credit card.

So I get it.

I am not here to condemn credit cards, or credit card companies.

I am here to show you that you in the end have all the control in the world on how you use credit cards, and the control is easier than you think.

And truthfully, it took many years at the bank, before I was able to grasp the idea that this is a widespread problem across all walks of life.

Now at the onset of this article, I will not be addressing those of you who already have balances on credit cards that you cannot seem to get down.  

That will definitely be another post on another day.

This article is about how to decipher if you should be charging it, or paying cash for it.

We have just exited another Christmas season, and I ask of all of you.  Was it a cash Christmas, or a credit card Christmas?

I am venturing to say for you at least, that it was a credit card Christmas.

For simplicity sake, I will use buying your kids gifts as an example.  Now I am not at all asking you to cheapen out when it comes to providing your kids a happy Christmas. But since we now have a full year to talk about next Christmas, I am hoping to provide you insight as to how to plan for next Christmas.

I have seen most people use credit cards to pay for items.  I am speaking to those of you who tend to keep a balance on your credit cards, not the ones who pay theirs off monthly.

Let’s suppose you buy your kid a game for ONE of his consoles (apparently, kids have multiple consoles nowadays).  Games as I have seen, run around $40-$50 each, and so let’s even assume that you have spent about $100 on games for your kids for Christmas.

This $100 spent on your credit card, that charges 22% on purchases will actually now cost you $111.29 and will take you a full year to pay off in full.  This calculation takes into account, that you never pay down your credit card, and that you only pay the minimum payment on your card every month.

Let’s keep in mind, that no one in their right mind would leave $100 on their card, and only pay off the minimum payment, because we all know that as credit card users, we have much more owing on the credit card, if we can only afford to pay the minimum payment.

The hope here is to make you realize that you can either take a full year to pay off that $100, or you can just decide now to save for when next December arrives.  Which of course you know should take you a paycheck to save that $100, put it away, and maybe even EARN interest, instead of PAY interest.

I hope you were able to find value from this illustration, and not be offended.  This was mainly to just put things into perspective about how we have been caught in that carousel of credit card spending.

I have included a live FB video here that I have received hundreds of views already to explain the simple concept of SIMPLE interest, and COMPOUND interest.  By the way, credit cards act to charge you COMPOUND interest.