S.A.V.E.M.M. News

Do you know about the Rule of 72?  It is a very impotant rule that you need to know in order to avoid getting into credit card debt and to make money work for you.  When you put money into the bank and earn interest on it, it increases according to this rule. 

Here is how it works.  If you divide the number 72 by the interest rate that you are getting on your money, the answer will tell you how many years it will take for your money to double.  For example, if you are getting 10% interest, then it will take 7.2 years for your money to double.

72 divided by 10 = 7.2.

Now the banks also use this same formula to compute the amunt of interest you owe on your unpaid credit card debt.  So, if you charge $100 on your credit card and the bak charges you 10% interset, then in 7.2 years, your outstanding balance will be $200 - that is, if you do not pay the bill and you do not charge any more purchases.  As you add more purchase to your card, the bank adds more interest.

If you charge $10,000 and the bank charges you 10% interest, then in 7.2 years, your outstanding balance will be $20,000!  This is how people get themselves into credit card debt. 

All consumer loans operate the same way and this is why we have such massive debt in the U.S.  People run into problems, cannot pay the loan payments, and the interest keeps adding up.  Begin to use your credit card wisely by not charging more than you can pay off in a month.