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Debt consolidation

Credit Card Strategies

A company is out there trying to hook you for life. They are prominent in all advertising and it seems cool to use their product. They even target teenagers! No I'm not talking about the tobacco industry. I'm talking about credit card companies.

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Debt consolidation
If credit card companies can get you in debt early, they may be able to keep you in debt for life.  You're either paying interest or making interest, and the paying side is worse in more ways than one. $1000 invested at a productive rate of 10% would turn into $17,450 over thirty years, but in the same time $1000 debt at 23.99% credit card interest would become $633,285 !

Comparison between investment and credit card interest rates.

As you can see, both rates of interest grow along similar curves. But look at them on the same graph, the cost of debt becomes astronomical!

Be aware of the ploys to get you to build a balance. Many cards offer 0% interest for 12 months - they know how many people will leave a balance at the end of a year. Others offer T-shirts or other gadgets to induce you to fill out an application.  Don't accrue interest such that you bought a several hundred dollar T-shirt!

Formal education, good role models, and learning on your own are all important for learning how to use credit cards wisely.  Starting off on a bad note with credit makes getting a house or car that much harder.  Credit cards are a necessary part of life.  They are used for transactions every day, and are a free convenience if you pay off your balance each month.  They are great for emergencies.  If you understand how the credit card companies make money and your own personal spending habits, then you can defeat debt and the credit card companies.