Dennise Williams, Staff Reporter
This week, as the Christmas shopping frenzy reaches its peak, More Money takes a look at how to manage money and choose carefully the debt that tends to accumulate during the holiday season. And so we throw credit cards, hire purchase and loans in the mix. However, as the mad shopping rush ends, your financial life continues and so the experts look at the year forward.
Merry Christmas to all and have a prosperous New Year.
DURING THE rush of the season, we sometimes don't take the time to calculate the true cost of debt. And when January comes, we then juggle the payments and wonder why we can never get out of debt. And so More Money asked Calvin Campbell of Fitz Ritson and Associates to run the numbers and work out the one-year repayment cost of charging $100,000 on your credit card compared to taking out a loan for the same amount.
We picked three banks and now present the numbers to you.
Essentially, the cost to repay a loan over one year averages $9,500 per month while it costs you around $10,700 to repay the credit card. How-ever, one thing to note a credit card is unsecured debt, while a bank loan usually requires collateral to support the debt.
What does this mean? It means that with the credit card, you pay more interest over the life of the debt than with a loan.
If you were to stretch the payments for a longer period, to say 18 months, it would make the debt more manageable, but would cost more in interest.
Depending on the financial institution, your monthly payments for debt of $100,000 would be around $6,500 for a loan and approximately $7,200 for credit card payments.
