Almost everything is a Scam Part 3: The Credit Card Scam
The average credit card debt in the USA is around $6,000 per person. This is a great scam. Most people have this debt. The average person services this debt forever. Sure, it fluctuates and interest rates vary too of course on a per person basis… but the average interest rate is around 19%.
Think about that for a minute. Credit card companies are like the loan sharks of old time. 20% is huge. Yes, some folks get off easier at 14% or maybe even 10%, and some folks with bad credit or delinquencies get hit for 33% or more. This is known as a financial scam.
Not everyone owns a car or a house but on a lesser note almost everyone has a credit card. It’s very easy to spend the money you do not have.
Smart people pay it off in full every month and take advantage of the card companies for ease of purchase and others use it as an emergency fund. But the companies are hoping that you will eventually reach a point of too much debt. They want you to be in this debt because the interest is so high. They make fortunes off of everyone.
If you look at this debt on a mortgage calculator and figure just paying the minimum, you will see it can lock you in for more years than you could ever imagine and the interest is so high your eyeballs will almost pop out!
Let’s go with $6,000 in credit card debt at 20% interest and with a 10 year payoff. This would run you $200 a month. Your total payments would be $14,158 if you never fail and if you never add another charge on that card. Ever. What is your interest for this $6,000?
It’s $8,141.30. You are paying far greater than 100%. So each time you go to buy gas on a credit card ask yourself: “Can I afford to pay $100 for this $50 tank of gas?” or “Can I afford to pay $400 for this $200 grocery bill?” or “Can I afford to pay $60 for this $30 pair of jeans?” If the answer is no, you need to stop immediately. Think about it.
Now this closely ties in with banks. Banks are also a scam. Folks pay $25, $30 and even $37 for just one overdraft fee. Often this can set up a cascade effect if you go under. Bounce one check and often a few other charges come in all at once and your bank can hit you for three overdraft fees and whack you for $100 in a heartbeat.
In a previous article I wrote about the auto industry being a scam. There are also “Buy Here Pay Here” auto sales companies all over America and they take in used cars at wholesale, flip for retail (often with 100% gains right there) and then they tack on 15% or higher interest rates! Not a bad scam!
Furniture loans like rent a center and others will often sell you furniture at some pretty high interest rates as well. Heck, every department store these days offers you a card; from Kohl’s to Sears to JC Penny! They want you to buy at full retail and then pay 10-20 % on this. It’s really a huge industry. Think about others too like Home Depot and Lowes.
America runs on Dunkin (donuts)? Nah. America runs on debt! Don’t let this be you. If you cannot afford it now… you cannot afford to pay hundreds of dollars a month in interest every month either!
Where can you make 20% in the stock market guaranteed? You simply cannot. However, you can pay off your debts ASAP and save a bundle. I strongly suggest you take this route.