Paying off credit card has its rewards for reader

DEAR BRUCE: About 12 years ago, I started looking at my credit card debt in a different light. I had never paid much attention to the monthly interest. Then one day someone told me to look at it. I was paying more than $85 a month in interest and bank fees.

That motivated me to make a change. It took seven years to get out of debt. Now I use my credit card to purchase everything — groceries, gas, appliances, medication, etc. — and I pay off the balance every month, earning rewards.

It is so nice to be debt-free. Last month I received $39 in rewards, which I used in the grocery store. It is certainly worth practicing discipline with your credit cards. I say, “Pay it off and get rewards.” It has taken us awhile, but we finally got it. — V.A., Klamath Falls, Ore.

DEAR V.A.: I am passing on your letter to my readers. It’s a great success story; thank you for sharing it. Everything you describe can happen to almost anyone. So many times people just don’t recognize where they’re going wrong. They have to sit down, as you have, and analyze everything, separate the chaff from the wheat. The motivation you mentioned is an absolute requisite.

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DEAR BRUCE: You suggested that V.P. from Pennsylvania, who had just come into $22,500 to invest, might want to have a broker look into some decent dividend-paying stocks. My belief has been that low-cost index mutual funds would be a better investment for those of us who aren’t really interested in playing the market. Could you please clarify? — S.W., Ashland, Ore.

DEAR S.W.: I have no problem with low-cost index mutual funds, other mutual funds and similar investments. Some have done well and some have not. The point I was trying to make is that there is no reason, in most cases, to settle for the tiny interest returns that the Federal Reserve has caused and continues to support with its paranoia about inflation.

There are myriad possibilities other than the low-interest-bearing traditional savings accounts, CDs, government bonds, etc. For example, there are very good major companies that I think are going to be here for a long time (no guarantees, though). Stocks in these companies pay a reasonable amount of dividend income and often, other things being equal, have increased in value.