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I once heard that credit card companies have a name for people who pay their credit card balances off every month. They call these people “deadbeats” because they never pay the credit card company any interest. This is, of course, meant to be tongue-in-cheek and not an insult. So, I sort of chuckled when I first heard it. But, if you really think about it, it’s not funny. Too many people get trapped in the cycle of making minimum payments. That is how a credit card company makes money. Some income is earned by service charges to the vendors, but MOST of it is from interest that is charged on the balance held on the card at the end of each month.

Credit-Card-Minimum-PaymentYou see, credit card companies love people who carry unpaid balances on their credit cards for long periods of time and pay heaps of interest through minimal monthly payments. So, if that is true, credit card companies must really love the Canadian people. We, Canadians, are carrying record levels of debt. You can read about it in the news almost weekly. You can see it on our own credit card statements. Many people continue to pay the minimum payment, if not more, but the balance never really moves. Have you noticed the small print that tells you how many years it will take to pay off the debt at the posted rate of interest? For example, a $4,000 balance on a credit card with an annual interest rate of 20% will take about 33 years to pay off. Many credit cards and store cards have interest rates that are even higher than 20%. Do the math. To make matters worse, the cost of living is increasing for everyone. Gas prices are climbing again and food prices are staggering. Doesn’t it seem like everyone out there has their hands in your pockets? There is the old expression: “time is money”… And it’s our money we are talking about. The longer we allow our debts to linger, the more money we waste on interest. That means we have less money for ourselves and our families; to say nothing of the toll the stress over the debt may be taking on our health, marriage, family and other important relationships. Now, there are a myriad of theories why we, as humans, procrastinate, and I will not get into those theories. But, I think we can all agree on two things: (1) procrastination causes stress and anxiety; and (2) we feel better and more empowered when we stop procrastinating and take action. So, it’s time to stop procrastinating and make a plan to eliminate your debt. You can do it in about five (5) years and, if possible, even a shorter period. It’s time to make a plan and become a “deadbeat” to the credit card companies.

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