Attack the Plastic

One of the unhappy after-Christmas and New Year “surprises” is the arrival of the credit card bills for the Christmas spending. Of the various financial tools available, the one we find most misused and most destructive are the credit card and store cards. A credit card used properly can be a very useful way to make purchases on-line, or when you are abroad, or to take advantage of a special offer. If you then pay the credit card balance off in full, you will have had 4 to 6 weeks free credit and will have avoided the “honey trap”. If you do not pay it off in full, it is all too easy to fall into the habit of just paying minimum payments. Paying minimum payments of 2% or 3% of the balance is an invitation into NeverNeverLand, as it will not pay off the debt and you will end up having paid an enormous amount of interest, while the credit card balances remain unpaid. If you need credit and are not going to be able to pay it off in full, use a loan. They are structured to ensure that the amount owed does really get paid off.