If you have credit card debts on hand, the best investment you can make is to pay off the debts. Guaranteed!
The typical annual interest rate for credit cards is around 20%. If you pay off this high-interest debt, it is as good as making a sure-win investment gain of 20%. Even Warren Buffett cannot be guarantee you such a performance.
If you prefer to let the credit card debts to rollover, please go back to school and study compound interest. At 20% compound interest, even a tiny amount of debt can wreak severe damage to your pocket. Don't believe? Use a spreadsheet and calculate the amounts you will have to pay over the years. This is the best way to appreciate the power of compounding.
A good understanding of compound interest has convinced me to avoid all high-interest loans like unsecured personal credit lines and credit card debts. On the other hand, I have been encouraged to save and invest hard to reap the power of compounding to my favor.
The typical annual interest rate for credit cards is around 20%. If you pay off this high-interest debt, it is as good as making a sure-win investment gain of 20%. Even Warren Buffett cannot be guarantee you such a performance.
If you prefer to let the credit card debts to rollover, please go back to school and study compound interest. At 20% compound interest, even a tiny amount of debt can wreak severe damage to your pocket. Don't believe? Use a spreadsheet and calculate the amounts you will have to pay over the years. This is the best way to appreciate the power of compounding.
A good understanding of compound interest has convinced me to avoid all high-interest loans like unsecured personal credit lines and credit card debts. On the other hand, I have been encouraged to save and invest hard to reap the power of compounding to my favor.
If you like my blog, please subscribe to the full feed RSS or subscribe by Email to receive all latest investment and financial planning updates.
No comments:
Post a Comment
Please leave your comment if you this post or you have your own point of view. Thank you.