By Chelsea Jamison - Seattle Pacific University

“I can afford it; I’ll just make monthly payments!”

I’m sure you’ve heard this phrase uttered from the lips of your friends, and if you are anything like me, you bite your lip, and in your head you’re screaming “No!”

This is a good illustration of how young people, especially college students, get suckered into buying items they can’t afford because they resort to paying only the minimum monthly payment. Being a college student like myself, I am sure you have been warned about charging purchases on your credit card and paying them off later.

It’s always best to pay off your remaining balance every month when you have a credit card, but that’s not realistic for everyone, which is why average consumer credit card debt is currently $4,088 dollars (FDIC). If you can’t pay off your entire balance, at least pay the minimum balance plus some.

There are many disadvantages to using your credit card instead of paying with cash or check. One of them is you don’t actually see the money leaving your hand, or actually writing out the amount that will be taken from your bank account. It’s easier to just hand the cashier your card and have it swiped. Sometimes you don’t even have to sign the receipt!

Remember, there is an emotional effect with cash, so you’re instinctively more cautious with your spending. So what is the real cost of making the monthly payments?

Click here to find out.

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