19. Credit Cards
Credit cards can become a great way to pay for an emergency if you can handle the payments and paying the amount off sooner. For instance, if you need to put a $500 on your credit card and your minimum payment is $25 with an interest rate of 21%, you will pay more on interest than your principal every month. This can take you at least two years to pay off, and that’s only if you don’t use your credit card again.
As you might know from personal experience, you can find yourself in a lot of debt quickly if you use credit cards. Because so much of your money goes toward interest instead of the principal, credit cards are a massive waste of money for poor people because they usually can’t pay more than the minimum payment. In fact, some can’t pay this and soon find their credit card bill in collections with even a higher amount and more fees. The moral of the story is to use a savings account to put away a little money each month, even if it is only $10 to $20. Use this money for emergencies only, and you don’t need to worry about credit cards.