hey there Tiffany Thomas with wealthy Tiffany dot com and in today's video I want
to share with you how to never pay interest on credit cards and before we
dive in if you are ready for financial freedom comment freedom below in the
comments and if you are serious about fast-tracking your financial freedom
click the link below this video in the description and it can help you do that
alright you guys let's talk about how to never pay interest on credit cards
because it's ridiculous how much people pay an interest on credit cards and it's
scary as well as ridiculous so let's address this and not paying any more
interest on credit cards and I really like this quote I'm gonna butcher it a
little bit but something about those who understand how compound interest works
earn it and those who don't pay it so those who understand interest they're
not paying interest they're receiving that interest and those who don't
understand it they're the ones paying it let's not pay that interest any more and
let's start earning it so I want to share with you guys five different
things that have helped me to never pay interest on credit cards I got my first
credit card I want to say it was the eighteen I'm not under percent sure but
it was definitely when I was younger and either ride around high school or
beginning of college and I had gone into the mall to go shopping for clothes like
I used to do all the time and I went into maurices it's a woman's clothing
store and they had said hey do you want to open a credit card and get I think it
was 10% or 20% of your purchase today and I thought oh yeah I do let's do it
so I opened one up and got approved and I think that was my first credit card
and that was over 20 years ago so I've been using credit cards for over 20
years and have never paid interest on a single credit card and so I want to
share these tips with you guys that so that they can hopefully help you to not
pay interest on credit cards and I still have multiple credit cards
today that I use because I really like earning the reward points that I get on
those credit cards it's like free money to me and I get that not everyone is
good at handling credit cards but for those of us that can work with credit
cards and not pay the interest always pay our balance in full and it's a
really great benefit because you can get those free rewards and a lot of people
use the travel rewards or you can do just the cash back or you can buy gift
cards if you're already going to be shopping at certain stores so it's a
really nice perk let's dive in and talk about the five different things that
helped me to never pay interest on a credit card for over 20 years of my
using credit cards so the first thing is actually understanding how interest
works and this is really important because I I've actually seen this so I
had a roommate that didn't understand this concept
she was just paying the minimum balance on her credit cards which was really
scary to me I found out that she was doing this and I was like wait a minute
do you do you understand what's happening here you're paying so much
more for the items that you have purchased by just paying your minimum
payment because you're paying so much an interest and you are going to have years
and years worth of paying off these credit cards for these small purchases
that you're making now so let me just go over how credit card interest works and
I want to share an example with you so that you can kind of get an idea on how
much you would actually be paying if you were just to pay the minimum payment on
your credit card every month there is this website it's on bankrate.com and
they have a credit card calculator so i just wanted to show you this example
let's say you have ten thousand dollars on your credit card for whatever
purchases you've been making and let's say it's it at a 20 percent interest
because I had looked to see the average is actually nineteen point two four four
credit cards right now so we're just going to round that up to 20
cent and let's say that's the APR the annual percentage rate that you're
paying on your credit card your interest rate you're paying and let's say that
you have a minimum payment of the interest that's on your credit card plus
a one percent plus the one percent of your balance so one percent of that
$10,000 plus the interest that you're paying so your minimum payment would be
about two hundred sixty six dollars and if you were just to pay that minimum
payment it's going to take you three hundred and forty six months which is
over twenty eight years to pay that off and you would pay over sixteen thousand
dollars in interest sixteen thousand dollars in interest on a ten thousand
dollar balance you guys that's like more than one-and-a-half times of the
original balance so this is super crazy that is the first thing that helped me
not pay interest is actually understanding how interest works and
just seeing how much you're actually paying for these small purchases that
you're making is is crazy so that was the first step and then the second step
is that I actually understood my own money situation I knew how much money
was coming in how much money was going out I knew all of my expenses and I had
the picture of my full money situation right I had I knew my expenses that I
was paying every month like rent before I bought my property and how much I was
paying and for my phone how much I was paying in utilities and even payments
that I would make either semi-annually or annually so every six months or every
year and like my insurance on my car and so there's all of these different
expenses and I knew how much each of those cost so I knew how much I was
spending each month and I knew how much was coming in I had a paycheck coming in
I had a full-time job and so I kept track of that and
one thing that I really like now is using personal capital and it's a free
website you can hook all of your financial accounts to it so you can hook
all of your credit cards and your checking and savings if you have a house
your mortgage payment your retirement accounts all of the different money
institutions that you use you can hook it to personal capital and you can see
all of these things in one place which is so handy so you guys if you're
looking just for a simple way if you're not really a spreadsheet kind of person
and you just want a simple way to see a quick glance of all of your finances
what's happening with your finances I really like personal capitals so I'm
gonna leave a link below yes it's a referral link and if you sign up you'll
get 20 bucks to Amazon if you hook one of your retirement accounts to it so
feel free to do that if you don't want to no problem it's just something that I
like to use personally so I had this picture of how much my expenses work and
to kind of go along with this point number three is I knew I needed to have
a savings I knew there would be emergencies that would come up and I
knew I would need to have a chunk of money and my savings account for these
emergencies for example after I had purchased my house a while after I had
to buy a new fridge my friend died I had to get a new furnace a new air
conditioner these were larger expense items so I knew I needed to have some
sort of savings I knew I needed to have an emergency fund so that's really
important you really want to make sure you have some money on hand to take care
of these emergencies and it doesn't have to be a lot of money I actually did
another video on this about how much you should be keeping in your emergency fund
and I know a lot of people like to say okay have six months worth for your
expenses or a year but I feel like it's really personal and so you really want
to decide what's going to work for you you want to be able to sleep at night
but you don't want to have too much of your money in savings you want to and be
investing your money so you can make it work for you but if you're just getting
started make sure you have some sort of an emergency fund that you feel
comfortable with that can cover emergency's if you do have a card like
there's going to be may need to buy new tires or something could go wrong with
it or you may need to pay your deductible on that so take those kind of
you know emergency items into consideration and figure out a good
amount that would work for you to have in an emergency fund so that's the third
thing I did I had money in my savings and that I could use right away and so I
felt really comfortable with that and then number four
I knew my priorities and you know it's kind of funny I have different
priorities now of course things change over time right I think it changed over
the years and so you know I had different priorities back then but I
knew what they were and I knew funding my emergency fund was number one and I
knew that I never wanted to go into debt for things that I didn't need I've only
gotten into debt for a car and four homes so for my home for rental
properties and and that's it like that's that's all I'll go into debt for I'm not
going to I don't know be spending money on a vacation that I can't afford to
take there was yeah just to give you an example I wanted to go to Israel and
Jordan and Egypt which is a very expensive trip and one of my girlfriends
and I wanted to to take this trip and I sat down and made sure that I would have
enough money for all of the expenses on the trip like we did it with a tour part
of it with the tour group and so they had you know an upfront cost and that we
had to pay so there was that that would cover our transportation and our hotel
but I also knew we would need to pay extra for food and any souvenirs that I
wanted or anything extra that we wanted to do so I made sure I had a buffer for
for that and and I felt comfortable being able to afford that I had money in
my savings so I wanted to make sure that I would still have Sun left for an
emergency but that I could take that money out of savings and feel
really comfortable paying for the entire trip in full without paying any interest
I didn't want to put on a credit card and not be able to pay that balance off
in full so you know I know my priorities so really focus on what your priorities
are what you're willing to spend your money on and what you're not willing to
spend your money on and I know I have friends that will take vacations and go
into debt for that they'll put it on their credit card and pay it off over
time but as you've seen as I showed them that example you're paying so much more
that it is not worth it to do that just wait until you have saved up the money
to go on that trip like I don't know I can't besides us enough like it has to
be a priority for you and I get that maybe you know when you think it's a
once-in-a-lifetime chance to do this and and maybe it is and maybe that is a
priority for you but start working toward that get an extra job start
making extra and cons start selling some things so you can pay for that without
having to pay any credit card interest because you'll pay so much more for it
and you'll probably regret that later anyway ok so that's what I did I knew my
priorities and I wasn't going to overspend to to you know take vacations
or whatever it is that I wanted to do and that's not how I wanted to have my
money be spent you know not not being able to afford it and having to pay it
off over time because it's going to cost way more than it would be worth to me
and then number 5 is knowing your due date for your credit card and using that
grace period so a lot of credit cards might give you like 21 days or 28 days
somewhere around there to pay off your credit card and full and not have to pay
any interest so I knew when that due date was and I would pay off my credit
card info every single time the only exception to this is when I had a 0%
interest rate on my credit card so there yeah there was a time when I wanted to
finish my basement at my at my place and I ended up putting half of that on
my credit card because they had offered me a 0% interest rate so I could pay
that off over time and I knew I would pay it off in full the for that 0%
interest rate that intro rate that they were giving me was going to end like I
planned that out so I would not be paying any interest and it would all be
paid off when that introductory 0% rate was gone because right after that's gone
it's going to go up to the 19 point to 4% or whatever it is and that normal
rate on your credit card interest rate on your credit card and you don't want
to have any sort of balance when that comes into play so if you are not going
to be able to pay off something in full if they are giving you a 0% interest for
a certain amount of time then don't do it like don't take that risk so that was
the fifth thing that I did I used that grace period I knew when the due date
was when I paid it off in full and by the due date and and that also helps
your credit score because you're not utilizing so much of your credit limit
you're keeping those balances low and which pushes your credit score higher so
that's another benefit and just not you know not to mention there's no worry of
having to pay these credit cards off over time and having that debt hanging
over your head that's not there when you are not paying interest on your credit
cards so you guys hopefully you found this video helpful and please like it
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my youtube channel that will really help me out and if you guys have other ideas
about content you want me to create please post that in the comments below
and let me know what you have experienced with credit cards maybe you
used to pay a credit card debt or credit card interest and but you don't anymore
and you know share with us what the switchover was what helped you change I
love to hear that in the comments and if you are serious about fast-tracking or
financial freedom make sure and click the link below this video so that I can
help you do that and I will see you guys in the next one
thanks