At times it can be very easy to forget that credit is a convenience and not a necessity. This is a fact that becomes all too clear when an entire generation of people don’t carry cash whatsoever anymore, it has become just as easy to draw out a plastic card rather than your cash, even now, in the coffee drive-thru, you can forgo it - seemingly that was the last call for cash.

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Cornwall - May 18, 2012 - At times it can be very easy to forget that credit is a convenience and not a necessity. This is a fact that becomes all too clear when an entire generation of people don’t carry cash whatsoever anymore, it has become just as easy to draw out a plastic card rather than your cash, even now, in the coffee drive-thru, you can forgo it- seemingly that was the last call for cash.

Keep in mind, that spending on plastic lacks a psychological connection to spending with cash visually watching your money leave your hand is a much different sensation than the impersonal swipe of a card. Whether it is a debit card or a credit card it does not make the same correlation in your brain and that could cost you much more in the long run. From now on when you pull out your credit card think of this:

A $5,000 credit card balance at an 18% interest rate when only paying the minimum 2% payment will take 553 months to pay off, that’s over 46 years and almost $14,000 of interest.

That same $5000 credit card balance at 8% interest rate paying the minimum will take 233 months and over $2300 in interest, and at 28% you will not pay off the debt in your lifetime making minimum payments.

Using the first example at 18% interest, if instead of paying only the minimum balance every month, you paid $150 a month that $5000 debt would be paid off in just 47 months, that’s less than 4 years and about $1900 in interest.

When it’s easier to pull out that card to pay for something than it is to open the envelope containing the bill, perhaps you should read this article again.