How paying interest on your credit card balance will destroy your wealth?

 The rule of 72 states if you divided 72 by your expected investment return, the answer will tell you how long it will take to double your money. For example if you expect an 8% return it will take you 9 years to double your money. You divide 72 by 8 which equals 9. This works in reverse for credit card debt. If you owe $10,000 on your credit card and are paying 20% interest in 3.6 years your principal will double to $20,000. 72 divided by 20 equals 3.6 years. You now owe $20,000 instead of $10,000. This is what happens when people only pay the minimum balance on their credit cards. Compound interest, like the Marines, can be your best friend or your worst enemy. It is up to you decide if you want money to be your best friend by saving and investing or you can owe tens of thousands of dollars in a short period and become a slave to your debt. The ball is in your court.

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  1. Ladies, First! - RealSmartica commented on Nov 30

    […] credit card debt.  Unless you have a special 0% financing deal, pay off this debt ASAP.  Reverse compounding is devastating to long-term financial […]