Credit Cards

July 5, 2007
I got my first credit card when I was 24 years old and I have carried at least a $100 balance every month since then. I have used Quicken since 1994 and it shows that I have spent $4,215 on credit card interest since then. I don’t pay nearly as much interest now because my balance is on a Discover card at 0% for the life of the balance. I just have to use the card twice a month. I pay off my American Express card every month so I don’t incur any interest. By the way, the Amex is not included in my credit card balances or usage becuase I do pay it off every month.
Interestingly, if I had been able to save the credit card interest of about $351 per year over the past 13 years at 8%, I would have an additional $7,545 in my retirement funds today. Even more interesting is the power of compunding that $7,545 that I would have had today over the next 25 years at 8%. I would have had an astonishing $51,672 in my retirement funds when I went to retire. Yes, that credit card interest has been very expensive for me.