The Double-Edged Sword of Revolving Credit
Used strategically, credit cards are powerful financial tools that offer fraud protection, complimentary airport lounge privileges, travel air miles, and 1% to 5% effective cashback on everyday utility spends. Used carelessly, they are the fastest route to debt spiral.
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1. Demystifying the "Minimum Amount Due" Illusion
Credit card statements prominently highlight the Minimum Amount Due (usually 5% of total balance). - When you pay only the minimum due, you forfeit your interest-free grace period. - Interest (averaging 3.5% per month or 42% annualized) begins accruing on every single transaction from the date of purchase, including fresh purchases made the next day! - Rule: Never pay the minimum due. Always automate payment for the Total Amount Due in full.
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