Teaching kids for budjet their credit card debt

Like many other children like my children to have new things they see when they see it. My oldest boy is still working angles, trying to make money, it expects grandma and grandpa for future Christmas and birthday, months before their arrival in order to finance its purchases now. I must admit that I fell for this beginning. Wanting to be a good parent, I would put forward the money for all sorts of things.

After some time, however, it occurred to me that I do my son a disservice. I was her desire for immediate gratification and the introduction to the world of credit facility. My two boys have become part of buy now, pay later culture that is as American as apple pie, hot dogs and hamburgers. They have little or no sense of deferred gratification. If my loan has continued, they could very well have become part of many who are in debt credit card to them. My ex-wife had fallen into the same trap.

Realizing the error of our ways, she and I decided to implement a new policy: more loans in future birthday and Christmas money as collateral unless the boys have received at least 75 percent of the total purchase price. We had no complaints and, oddly enough, no request.

If you have a child and you were allowing instant gratification, you want May to adopt a similar policy. It will serve your child well later in life, when credit cards are beginning to appear in his mailbox. You May also want to spend some time talking about how credit works in the real world is how fast you can run a large balance and how long it will take to repay the debt card credit, particularly if you fall for the trap minimum monthly balance of credit card companies hope that you catch. That is how they make their money.

The minimum monthly payment is the smallest amount you can pay a credit card company and to be a cardholder in good standing. Generally, the minimum monthly payment is equal to two percent of the balance or $ 10, whichever is greater. Interesting to note that some statements refer to the minimum the cardholder amount due. "It's up to you to believe that this amount represents the payment. This is not the total amount due.

The minimum monthly payment is a credit card companies use to keep you in debt, as long as possible to make the most money out of you as possible. If you have had experience with this regime, you know they are also lower minimum monthly payment for the balance of credit card declines.

If you choose to pay the minimum each month, you'll pay much more interest if you pay the card quickly. For example: A person who makes a minimum payment of $ 80 on a balance of $ 4,000 to 21. cent annual interest rate will take nearly ten years to repay the loan. The interest cost is $ 5592 with the owner to pay a total of $ 9592 - more than twice the cost of the original loan. Make minimum payments more results in finance charges if the card is repaid quickly. In fact, debt credit card usually takes three times longer to pay as any conventional loan of the same value.
Some credit card companies even allow the cardholder to skip a payment without penalty or two, especially at holiday times. Although this May seem like a great idea, keep in mind that interest will be charged during this period, and even more in finance charges will be due before.

In summary therefore, the minimum monthly payment is not intended to get you out of debt quickly. It is a way to make the most out of your hand.

Not that I do not have credit cards. I got my first credit card at age 51, not by need, but because many car rental companies will not accept debit cards (my usual way of processing these transactions) . I use my credit card wisely, on a pay-as-I-go basis, the liquidation of the balance each month, but gained little mileage on Frontier Airlines at the same time. I explained this to my children and leave them in the secrets of my system for the management of money, which is very good "buy only what you really need, pay as you go, to avoid credit, and if you need a loan short repay as soon as you can. "I told my boys, for example, that if you make an extra payment each year, 30-year mortgage you can reduce the payment period from 30 to 20 years, saving tens of thousands of dollars in interest! They liked the idea.