http://www.youtube.com/watch?v=wbkTuFJVrXI
You can’t go in to get out. What’s that you say, Greg? I’m saying you can’t go IN debt to get OUT of debt. Try telling that to a local bank whose radio commercial I recently heard.
This was the gist of the ad. Use their credit card and you could earn points toward reducing the balance of your mortgage. Notice the word COULD is in italics here. This is one of the oldest and most pathetic enticements used by lenders to sucker you in.
Earning points to use a credit card is really juvenile if you think about it. It speaks to the child in us. If you’re a good little boy/girl and you behave correctly (use their credit card), they’ll reward your good behavior with points! What are they, brownie points? Are we talking Boy Scouts and merit badges here? No, we’re talking about your hard earned money.
The bank would have you believe that if you go into debt with a credit card, it’ll help you get out of debt with your mortgage. Asinine to say the least. Trust me. You’d never earn enough points to pay your mortgage off. If you did, your credit card balance would be so enormous you’d never pay it off. Revolving interest is not part of a good personal finance plan.
A $3,000 credit card purchase @ 19% interest, making minimum monthly payments would take you nearly 30 years to pay off! Don’t fall for the BS the lenders are using to try and get your business. You’ll never get debt free using credit cards.
This ad tells me banks know you are getting much smarter than in the past. You’re slowly realizing that it’s smart to prepay your mortgage. When you do that, the bank makes less profit because you pay them off faster. So they’re trying to make up that loss with credit card interest payments going from your pocket to theirs.
Remember: When you pay interest to borrow money you’re just renting someone’s money! Interest paid is nothing but rent. Don’t be a renter. Be an owner. Pay cash.
I challenge you to shred one credit card this weekend. Go ahead, live on the edge.
To Your Financial Freedom,
Greg Whitaker
