Reducing and Managing Debt – Make Money on Interest Rather Than Pay Money

By reducing and managing your debt you could end up making money on interest rather than paying money on interest. One of the reasons that many people have built a significant amount of wealth in the United States is that they have received interest on their savings and investments. Instead of paying interest on credit cards and loans they made interest on the money they saved.

By finding a savings or money market account they can offer 4% or better the money that you sink into this account will grow much quicker than you can imagine. If you continue to sink money into the savings account over a ten-year period you are going to see that money again almost 50% in interest. The more money you put in the more money you will end up with.

Unfortunately, many Americans do not understand the concept of compounding interest. This proves to be true with the amount of Americans who are paying a high interest-rate on a credit card or loan rather than saving their money. Many people are paying interest rates upwards of 15 to 20% on a credit card when they could be gaining 4% in a savings account.

This is a difference of 20% or more on your overall money. Instead of gaining 4% on a savings account you are losing 15% to 20% on a bad credit credit card or loan. Over a 10 year period this could end up being tens of thousands of dollars that you have thrown down the drain. Once again, most Americans cannot grasp this concept as they continue to buy on credit.