Getting the best from credit cards
Credit cards have many uses and have often been thought of as free money. It is not until the credit card bill has got out of hand that we begin to worry that you may not be able to afford the repayments.
When we start our repayment plan, we often think that the repayment schedule is not too bad, it is only after some time that we realise the initial amount is not becoming reduced.
At this time we realise that we must make excessive payments in order to combat the interest repayments that are being fixed on the outstanding balance. It is only this way, reducing the initial balance that we can ever hope to repay the initial amount. Of course once we make a payment in excess of the minimum amount, the excess payments will reduce the primary loan, and this will mean the next payment will reduce the loan or even further because the interests repayment is slightly lower. This works same way for mortgages, in that reducing the primary loan will result in a much faster repayment, assuming monthly payments are kept at the same level, because the initial loan level is being reduced. This is a way that you can beat the money making Mortgage System, because a small overpayments every month will not years or off of the term, and this is overpayment is not as large as you think.
A simple overpayment of $50.00 a month will result in $1200 being knocked off your primary loan every year, if the interest rate stayed the same. This is a simplistic view, for the more precise amongst you, every month that you knock off $50.00, the interest is lower, so the second month it is $50.01, the third month it is $50.02, and so on. Thus, in five years, this $50.00 repayment will actually be around $70.00 per month off your original amount that you borrowed.
It is this ideal that also works for credit cards, and you should put to work as soon as you’re able, it is in your pockets interest to do
