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realo
New Member
2 Posts |
 Posted - 28 February 2006 : 08:44:06
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When asked what was the most powerful thing he had ever witnessed, Albert Einstein responded simply, “compound interest.”
To give you a rough idea..
Buy a sofa at £1000. Make minimum payments at 20% and it will take 31 years and cost more than £5,000.
If the person who gets your £5000 invests it in 31 years time they could have £24000... No wonder they want to sell you that sofa on easy finance.
The figures are only approximate to give you an idea of how compound interest works and I have used it only to try and give you a warning about consolidating debt:
done right it can save you loads of money, done wrong and it can get you much deeper in trouble.
The fact that a payment is lower does not mean you are saving money.
The less you pay per month the more you pay overall. Another example:
Say you are paying off a £2,700 balance at 17%. Increase the minimum payment by half from 1.5% to 3% and the total interest is reduced from over £13,000 to just over £2,000, and the debt is reduced from 81 years to 18 years.
So the lesson in all this is..
when considering a consolidation loan, look beyond the interest rates and ask for the total cost.
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lazio
Starting Member
1 Posts |
Posted - 28 February 2006 : 10:29:09
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Store cards charge by far the highest rates for credit, so if you're finding it hard to manage these debts throw away your cards now to avoid temptation.
You'll pay well over the odds for most store cards - it's better to pay cash if you can. For those items you can't pay cash for, shop around for the best deals - the market is competitive, so there are some excellent interest free credit offers around. It is also worth taking a look on the internet as many products are offered there more cheaply.
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realo
New Member
2 Posts |
Posted - 28 February 2006 : 10:45:08
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Yes, lazio, you have hit the nail on the head.
Credit cards are such a temptation!
Would you believe, some credit companies ring people on the same day they have been discharged from bankruptcy to offer more credit.  |
Edited by - realo on 28 February 2006 10:45:40 |
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quegley
New Member
2 Posts |
Posted - 28 February 2006 : 13:04:18
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another statistic ...
The total debt for those who struggle to make only minimum card and loan repayments each month has been put at £20billion. Most of them must be heading for financial meltdown..
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Gary
New Member
USA
4 Posts |
Posted - 07 November 2006 : 06:53:50
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That is true its nature that compuond interest calculations really make the money melt and I think everyone must be aware of such details.Thank you for the suggestions provided on compound interest.
Regards
Gary
Good things come in small packages BUT The bigger the better
http://www.creditsolutionsteam.com |
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loan help: look out for compound interest!
