Staying Out of the Debt Trap
01.The Danger of Minimum Payments
Credit card bills will list a 'minimum payment'—a very small amount (like $15) that you can pay to avoid late fees. Many people fall into the trap of only paying the minimum. But the rest of their balance is charged interest, compounding against them!
02.The Reverse Snowball
When you have debt, compound interest works in reverse. Instead of building your fortune, it builds the bank's fortune while your debt grows bigger and bigger. It's like trying to walk up a downward escalator!
03.The Rule of Thumb
Only buy things on a credit card if you already have the money in your checking account to pay for it immediately. Treat your credit card like a debit card and pay the balance to zero every single month. That is how you win the credit game!