What’s the deal with carrying a credit card balance, why are people okay with it?

If you are charging on your credit card, collecting tons of free rewards and paying off your balance in full every month, congratulations you are what credit card companies would consider the true deadbeat.  They barely make any money off you.  They don’t collect any interest and on top of that its a total wash for them becasue they pay for the cost of the points you redeem with the merchant fees they charge the store.

 It’s the people that are carrying a balance, buying useless crap stuff and scrambling to make a minimum payment that the credit card issuers love.  They know that you are a life time payer, it can take anywhere from just 13 years to anymore than your entire lifetime to clear up a balance by just making minimum payments.  It’s insanely profitable for the banks.

I’ve heard all sorts of reasons why people dig themselves into such a hole, but the one that upset me the most was the story from a single mom buying (quite literally) tons of electronic gadgets in effort to please her unhappy kids who wanted to keep up with the joneses’.  This story ended on an even more tragic note; her unhappy son ended up committing suicide because he couldn’t handle the collection calls from bill collectors once it all caught up to the household.

I really wish schools, would teach financial intelligence to kids at an early age and repeat the lessons throughout the years of school.   Practical financial knowledge is so important because its unlikely creditors will let the responsibility sit squarely on their shoulders or pull back on offers to get credit cards into the hands of people who don’t get how it works.

Be smart about credit cards, be a true deadbeat and fly around the world for free on points you accumulate on the banks dime.

What do you think? I’d love to hear your thoughts.

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