BOSTON (CBS) – April is Financial Literacy Month and last week we talked about getting your act together at every stage in your life. This week I thought we could spend some time discussing credit. Managing your credit is a learned money skill.

The latest Federal Reserve numbers from February has revolving consumer debt at $885 billion. As a nation we are using our credit cards. A lot!

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Credit is a privilege. Not a constitutional right despite what some people may think. Credit allows you to use someone else’s money, the bank or credit card company, to buy the goods and services you need or want.

You are borrowing money every time you use your credit card and you do need to eventually pay it back. And if you don’t pay off your balance every month, the credit card company will charge you interest for using their money.

And if you are late in paying your monthly bill or miss a payment, the credit card company has the right to charge you late fees. And they do; $25, late again could go up to $35.

When you talk about credit you need to talk about debt. There is good debt and there is bad debt.

Good debt is the kind of debt that eventually increases your bottom line, your net worth. A mortgage normally would be considered good debt for it helps increase your net worth; it allows you to borrow money to buy real estate which hopefully will appreciate.

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Bad debt is your credit card debt that you don’t pay off in full each month. And close to 60% of consumers have at some time last year carried their debt month to month.

If you carry a $3,000 balance with a 14% interest rate, and you pay only the minimum each month, it will take 20 years to pay it off.

And it will cost you over $3,500 in interest over those 20 years. Credit card companies just love it when you only pay the minimum.


You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

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