Weekly Tip #15
Have you heard of the new plan Target rolled out? They will give a 5% discount on every purchase made with a Target branded credit card. What about the 10% discount that TJ Maxx is offering? That sounds totally awesome, right?
Target will give you 5% off on purchases made with the card however the interest rate is upwards of 25%. Are you listening? 2-5-%!!! When a 5% discount costs you 25% in interest it isn’t a discount at all. Sure, if you pay the entire bill each month it is, but let’s be real; if we paid their entire balance each month we wouldn’t have a credit crisis. And I? I wouldn’t have a credit card balance from 5 years ago!!
Just for grins (or groans) let’s put this to the test:
It’s November people! You’ve got some Christmas shopping to do! You’re bored and meandering around SuperTarget when it suddenly hits you that you have your Target branded card in your wallet so you go ahead and load your cart with $200 worth of goodies and groceries. You know, cause you’ll be getting that 5% discount and all…
Target would like you to believe that you will pay $195 on that purchase and they’re banking on you believing them. You can only pay $195, IF you walk to customer service and pay it immediately, or IF you pay the entire balance before the due date.
The odds are that you won’t so here is the real picture… Assuming that you make monthly payments of $50, and without adding more to the card, you will make 4 payments and pay $200.16, which is more than the original value before that *killer* discount. Pun intended.
Don’t even think about giving in to the “well, it’s only $10” thing because we are being honest with ourselves now. And when you are honest with yourself that is why you have credit card debt in the first place. And it AIN’T only $10!!
That 5% discount cost you a lot more than that $10.16 though. If you hadn’t been tempted by that 5% discount you wouldn’t have spent $200 in the first place. Right??? Because if you only had $50 in your pocked you wouldn’t have loaded up the cart! What’s more is that the lure of 5% will likely have you purchasing $200 over and over and over… and there begins the fabulous circle of debt.
Back to the original $200 on the card, $10 is $10 and it belongs in your hands. PLEASE be smart. Walk. Away. From. the. 5%.
I’m not picking on Target just their means of seducing you (us) into credit debt.