The Federal Reserve released data at the end of 2015 on American credit card debt. The total was $935.6 BILLION! On average, an American between the ages of 18 and 65 has $4,717 of credit card debt. The average credit card's interest rate is 15%. At the minimum payment of $189, it would take 10 years and 1 month to pay off that $4,717. The total payment would amount to $22,869. That is a $18,155 cost for a small loan amount!*
Ask yourself these questions:
How many credit cards do I have?
Do I know how late payments negatively affect my credit score?
Do I use my credit cards only to collect rewards points?
Do I know how to calculate interest cost?
And most importantly: Do I use my credit cards smartly in front of my kids?
Purchasing items with your credit cards is not wrong but using them recklessly is! Kids nowadays are very smart and observant. You can demonstrate to them that you are a responsible and smart credit card user. You can show them that you have self control when it comes to your spending habits. You can show them that you can set a solid budget and that you are able to stick to it. You can show them that you do not spend excessively with your credit cards just because of convenience or just to collect rewards points. You can show them that it is important to pay your credit card payments in full.
Use credit cards wisely in front of your kids...because after all, kids know!
*Money magazine: 'The Average American is in Credit Debt, No Matter the Economy.' February 9, 2016