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Monday, February 05, 2001
How To Earn 18% Guaranteed
by Financial Literacy Center
Want to earn 18% on your money? Then you must reduce your debt. It takes a 25% return before taxes to equal the "savings" from repaying an 18% credit card. Here are five ways to repay debt quickly:
- Transfer your balance to a low-rate credit card. Future payments include more principal and less interest.
- Tap your savings. Why leave a balance on an 18% credit card if you have money in a 3% savings account that can be used to pay off the credit card balance.
- Accelerate repayment. When a debt is repaid, add its monthly payment to another, starting with the highest-interest-rate debt first. This reduces the time required to repay remaining debts — and the total interest charged.
- Consider consolidation. Combine several high-interest credit card balances into one lower-rate loan. Just don't run up your balances again, or you'll have both a loan and credit cards to repay.
- Negotiate a discount. Many credit card issuers will reduce fees or interest rates when asked. Call them. The less interest you're charged, the faster you'll climb out of debt.
Reprinted with permission of The Financial Literacy Center
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