Clever credit card reduction trick!

[sabrinamari]

My dad found this for me. I don't carry credit card balances anymore, because I was lucky enough to get them paid off, and I dislike credit card companies with a deep and abiding aversion. But it's too good a trick to waste, so maybe it can be used by someone else. If even one person can use it to wrestle away a few of their dollars from those nasty guys, I will be happy:


"Credit card expert Marc Eisenson (www.investinyourself.com) found that you can
pay off your balance an incredible 75% faster by taking your regular monthly
payment, splitting it in half, and making half payments every fourteen days. So
if you're paying the minimum $200 a month, you instead pay $100 every fourteen
days. It works because banks calculate interest every day, and by getting the
money to the bank more frequently, you cut your interest costs. At first it
makes a slight difference, but through the years it makes an enormous
difference. Eisenson's technique also requires you to pay the same amount every
fourteen days, even as credit card companies begin to lower the required monthly
minimum. So more of each payment goes to pay down the principal rather than the
interest."


From "Get Clark Smart," pg. 70

Comments

[glenmarshall.livejournal.com]

Another way is to always treat your credit cards like cash. That is, if you don't have the cash to back-up a credit card purchase, don't use the card.

We've been doing that since 1972. It has the benefit of forcing us to pay attention -- yet not be obsessive about - how much we have to spend. The only time we use credit is on MAJOR expenses, like our kitchen remodeling or a car.

Loans based on property (mortgages or home equity loans) or tangible goods (cars or similar) are typically at a low interest rate. Better yet, interest paid on home improvement is tax-deductible.

While we could have sold some investments to pay for home improvements, the after-tax interest rate is much lower than the average annual gain in the stock market. So by using home equity credit we've actually earned more money. The bottom-line of that is that we expect to be able to pay cash for our next new car.

[sabrinamari.livejournal.com]

Glen, this is so smart. I love your wise and clever ways!

[skyefyr.livejournal.com]

That's how I always tried to use my cards. Unfortunately, with being unemployed and barely employed this last year, when I got hit with a couple really big car repair bills, I had no choice but to charge. And then there was that time I really needed groceries....

But things are looking up and I'm working on getting back to the point of using them like cash again. I feel so much better when I don't owe people money.

[faedaughter.livejournal.com]

Cooooool! Thanks for that tip. I only have 1 card but I struggle with it. I am going to look into a low intrest balance transfer soon, but I am afraid that I won't be able to transfer the whole balance. In the meantime I can start doing this right away! Wheee!

[sabrinamari.livejournal.com]

I'm so glad. I want all my friends to get to keep their money as much as possible and not have to give it to the *real* Wolfram and Hart.

[skyefyr.livejournal.com]

Thanks for the tip!

I just discovered that two of my recent payments to the credit card company were made on weekends, and didn't post till the following Monday. (Teach me not to look at the calendar when paying bills!) Anyway, they posted "late" and the company has now raised my interest rate to almost 32%. Needless to say I'm paying this card off as quickly as I can and getting rid of it! Jerks!