How to beat the bank on compounding interest

Have you ever wondered where all your money goes every week or every fortnight or even monthly? Here’s a thought that I want you to consider and ponder as you read this article. This is just one example. You take $ 10,000 out of your savings account from the bank and they give you all the dollar bills. You take the large amount of money that is all in dollar bills equal to $ 10,000, which turns out to be your hard-earned savings account that took you many years to accumulate; And you stacked them on top of your dresser in the open where you could see that big pile of money that’s all in dollar bills. What do you think would happen over time if you walk past that big pile of money that, by the way, all in dollar bills that equals $ 10,000?

My friends, you and I know what will happen after a period of time if you keep walking past those dollar bills. Eventually he will start taking a dollar and then maybe a few dollars more because there is a lot of money and no one will miss it. At least you tell yourself! Then one day you finally realize that that big pile of money that was really tall and almost tipped over is now standing upright and yet you keep walking in front of your dresser and take a few more dollars every day. The bottom line is this: Your $ 10,000 will be spent in just a few moments, even if you pretend you’ve never touched the money in the first place.

Today I want to show you the power of compounding. You will need to make a few more changes to the way you make your payments, but the result will make you smile.

This is just an example: one of your monthly payments, you owe approximately $ 5,000 and your minimum monthly payment is $ 100 per month. Now I know for a fact that $ 5,000 to make the minimum payment will take approximately 25 years and seven months to clear the minimum payment each month.

Now if you change the way you make your monthly payment each month, and you take that monthly payment of $ 100 and divide it into four payments, you will get about $ 25. You are at the beginning of the month. Make your monthly payment as promised and wait a few days and send $ 50 on your bill for payment. Then wait another week and then send $ 25. Then wait another week and send another $ 25.

I’m going to repeat myself again but in a slightly different way. Take that $ 100 divided by four and that equals $ 25. You’re going to take the first $ 25 and multiply it by two and that equals $ 50. And you’re going to send that $ 50 payment to the people you owe. You’re going to wait about a week and send $ 25. Then, he’ll wait one more week and send another $ 25. This equates to roughly $ 100, which is his minimum payment on a credit card.

Now I need to make this very clear. To start this program using my example, you must make the payment of one hundred dollars and make the $ 50, $ 25 and $ 25 the first month. The second month and all other months remaining, you will only be making the $ 50 payment at the beginning of the month, waiting a week and making that $ 25 payment, waiting another week and making another $ 25 payment. Which equals $ 100 for your monthly payment.

If you follow me so far, you haven’t paid any more money in your monthly payment except for the way you are doing it now. We’ll break this down even further. You are making more payments on your credit card that equals $ 100. Or in other words, if you wanted to, you could pay $ 100 on your credit card bill every day.

Now I need to give you some advice. You should have about a week without payments. Now why am I telling you this? Because credit card companies are known to hold your payments. And if they could withhold your credit card payments and it was late, they would now have charged interest on your payment.

Remember my example when I divided the payments into three payments? On average, if you are making your payments, you will have one to two weeks with no payments on your credit card even though you have made full payment of your payment. This example that I have shared with you will prevent the bank from adding interest to your loan.

Now that you understand how to make your monthly payments by dividing them into three payments, your monthly bill will be settled in approximately five years and eight months. And guess what? You never paid more money for the bill other than making more frequent payments that are equal to the minimum payments.

We’re on the same page? All Visa cards, Master Cards, student loans, car payments, lines of credit; the interest charged on these items is compounded daily and not annually. Don’t be confused when the bank tells you that our cards or your car payment or student loans are compounded annually. This is a bullshit! The bank only plays with words. I am sharing the facts with you as a fact that monthly bills or any form of card, car payments, and student loans are compounded daily and not annually.

What does this mean for you and me? It means that we, as individuals, are paying a huge amount of money for interest that should go into our own pocket, rather than the bank! I need to be honest with you at this point, the way I taught you how to make your new monthly payments on your cards that charge you interest is called compounding. You will make the bank very nervous and they will try to persuade you to make a single monthly payment instead of more frequent payments.

Here’s another thought that I should share with you as you make your new monthly payments on your interest-bearing cards. Here is an example and a person owes $ 5,000 on a card. What you need to do is take out your calculator and multiply $ 5,000 by 3%, this will equal $ 150. If this was your card, and you look at your minimum monthly payment and you see $ 97, you are in big trouble! Why am I telling you this? Because these banks know how to make money and they do it very well when they use compounding. Remember the example I gave you that you multiply 3% on what you owe on one of your cards. If the minimum payment is less than 3%, it will take even more than 25 years and eight months to pay off that card.

Now the reason I wanted you to get out your calculator and check the minimum payment is because banks are now extending the amount of time it would take you to pay off your cards. By using the 3% rule that I have shared with you and dividing the payments into three payments or other words, more frequent payments, you will have the credit card paid in approximately five years seven months.

If you have the drive and motivation to stay on track, I promise you will be able to reward yourself in time by not having any more credit card payments. I have personally taught hundreds and thousands of people across the United States how to do this simple program called compounding.

I have to be honest with you, not everyone can discipline themselves by taking this type of action. No one will remind you, no one will call you, no one will send you emails, or send you a reminder by mail, so you can make more frequent payments on your credit card payments. This requires real guts to make a change in your life and the way you make your payments. It’s not going to be easy and there will always be things that will get in your way that will stop you from time to time. Don’t let this happen!