Ever stop to think about who is profiting from the credit card debt you’ve accumulated? Let’s face it. There’s a reason why we get bombarded with credit card offers in the mail, on television, and in the stores. People are getting rich off your spending. First, from the purchases you make, often under the illusion that you’re getting a bargain. Secondly, off the interest they make when you don’t pay off your credit balances at the end of the pay period.
Everyone is pushing you to buy more stuff (including the government with their new tax rebate incentive), from flat-screen televisions, to designer branded apparel. You don’t really need that 40” plasma TV, but all your neighbors have one and it’s now on sale, and oh, by the way, you can purchase it 90 days, 6 months, or a year, same as cash. Why are they so willing to put that television on sale and let you delay payment, with no interest? Because even on sale, the retailers still make a profit and when the bill finally comes due, if you can’t afford to pay it off (which is exactly what they are expecting will happen for a large percentage of customers), they make huge interest profit off your debt – interest that started to accrue back on the date of purchase. You’ve more than lost the "on sale" savings and you now own a television you couldn’t really afford to begin with. The retailer and credit issuer both got rich off your credit debt.
While I was in a local superstore the other day shopping for groceries and a few other items, the store announced several times over their PA system, ‘Open up a charge account with us today and save 30% on your entire purchase.’ What a deal! Even if you don’t need another credit card and you’re only able to make the minimum payments, saving 30% on groceries sure sounds good! Why are they pushing you to sign up for a credit card and give you such a “great” incentive to do so? The store makes out because you’ll end up buying more items - items you wouldn’t ordinarily buy or don’t really need because, after all, this is your one-time opportunity to save 30%. So you end up buying more than you planned and then, when you can’t pay off the balance when your credit card statement comes due, you pay interest on that balance. There went your 30% savings. The reason everyone is pushing you to buy and buy on credit is that they actually hope you can’t pay more than the minimum so they can get your money today, and keep getting it and keep getting it…in the form of high interest payments. And to add insult to injury, that extra credit card just made your credit score go down!
Before you purchase on credit that designer purse, a manicure at the local nail salon, or the latest electronic gadget, think about who is getting rich off your debt. There’s a bank executive buying a vacation home on the beach while you’re struggling to make your mortgage payment on top of those high-interest credit card payments. There’s an advertising executive driving a new sports car, all because he did such a great job convincing you that you needed all this stuff. Meanwhile, you’re late on your credit card payment because you spent the money on high-priced gasoline for your car, a car that you financed for 48 or even 60 months and is now worth less than what you still owe on it! Everyone from retailers, to media executives, to financial institutions have done an excellent job convincing you that you deserve to have everything you want, whether you can afford it or not. Treat yourself now. Pay later. They’ve created a monster – a society of entitlement where people aren’t willing to wait until they can afford the things they want today.
It’s time to jump off this fast moving consumerism train and get out of debt. Don’t let the profit from your debt pay for their children’s Ivy League college education. Pay off your debt and start putting that money, money that used to go toward interest payments, into a savings plan for your own kids’ education or your retirement. If you’re one of the millions of people with high credit card debt ($10,000 or more), have minimal savings and are the one in six who pays only the minimum due every month, then you need a realistic plan to get yourself out of debt and back on track. Click here to read my blog for more information on a plan that can get you free of debt in months instead of years and for less than you currently owe.
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