In today’s economy more and more people were jumping on more and more new credit card offers. Wrong. I am no accountant and pretty much all of my fiscal knowledge was gained by paying late fees overdrafts and robbing Peter to pay Paul.  In the credit card business, emphasis on business, they make money when you have outstanding debt with them. This is why they call people who pay off their balance every month “deadbeats”. They don’t make money off those individuals. Nobody does that though. Min. balance every month is usually how it goes. The argument for this behavior is that it builds your credit score. There are less expensive ways to do so.

When you leave a balance on a credit card you end up paying 15% on what you leave every month. If you had a balance of $450 on there and paid off a min of $100, then you’d be giving that company $50 of your money every month. That is too things. 1) Stupid. 2) Good Business. Just because this practice is a social norm and is the way it has been, doesn’t mean you need to indulge in it! It’s financially irresponsible. You want a card? Fine. But pay that sucker off every month.

Financial Institutions don’t automatically know best. Exhibit A would be the banks giving out of all the sub-prime loans and derivatives that helped in the housing market collapse. The Fed issued them the money. The banks then gave ‘em out and then on the back end, broke them up and sold off the little bits to other institutions. Everyone was making money. It was fantastic. And then the party ended and we’ve been left with the repercussions. The same slippery slope can be applied to credit card debt. I’m not saying credit cards are evil, but if you have a need for one, use it responsibly. Remember its debt (absence of money) and not money. The absolute biggest myth about these things is that you need to carry a balance to build credit.

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