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Money Mentors is a not-for-profit credit counselling organization that is dedicated to educating Albertans on debt resolution, the wise use of credit and unbiased personal money coaching.
Credit cards are not cash
You should try to use credit cards only for items you can pay in full when you get your statement. Just because your limit may be $5,000, it doesn't mean you have $5,000. If you buy something on sale with your credit card but don't pay it off quickly, the interest charge each month could end up costing you more than the regular price.
“If you have to carry a balance, avoid only making the minimum payment,” says Tracy Watson, Director of Communications at Money Mentors. “At 18% interest, it would take twelve and a half years with a $200 monthly payment to clear up a $5,000 balance…and that's without making any new purchases. On top of that, you'd end up paying over $2,900 in interest, which more than cancels out the deals at the sales counter.”
More on Debt Management in the next issue.
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