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Loansquick.com
wants you to know
Six things your credit card company hopes you never find out
#1 The average consumer has 4 credit cards, with an average balance per card of $3900 (that’s $15,600 in debt in case you haven’t done the math!) Sure, there’s safety in numbers, but is this the company in which you want to belong. I don’t know about you, but I’d much rather belong to the “below average” customer group that has less than $1000 in TOTAL credit card debt. These companies keep offering us new cards every week (think of how many you have gotten in the last year!) with higher credit limits and cash advances. Basically, they insult our intelligence. Many consumers are flattered when they receive their “PRE-APPROVED PLATINUM VISA, just fill out the form below, sign and send back” letter. We think we’re being rewarded for a job well done. The job, of course, being able to spend money with the best of them, and pay it back, better than most. Don’t get SUCKED into this mental trap!!! STOP TRYING TO KEEP UP WITH THE JONES’S’, THEY’RE HEADED FOR BANKRUPTCY, ANYWAY.
#2 If you make the minimum payment due on your average balance of $3900 each month, your credit card will be paid off in approximately 39 years! It’s called “amortization”, or in the case of credit card repayment, I should say “lack of amortization”. In lay people’s terms, this simply means, you have no real term set in order to pay this back. It’s open-ended. They’ll let you pay on that same balance forever if you let them. When you buy an automobile, you may finance it for 5 years. You know, that if you never send an extra dime but your monthly payment to that loan company or bank, you will own that car on the day of your 60th payment. You have none of these guarantees with credit cards. They are revolving accounts. I guess you can say they are like the Energizer Bunny, “THEY KEEP GOING, AND GOING, AND GOING, AND GOING, AND GOING...”
#3 Because banks know that credit card usage is at an all time high, most of them are vying for each and every one of our business. Many offer promotions like transferring balances from other cards to the new card they can offer you. If you transfer balances from other cards, they say, they will charge you a reduced rate of interest on those portions that are transfers. This sounds like a great deal (going from 18% to a promotional rate of say, 6 2 %), however, most of them have a catch. For instance, if you do not charge something new on the new card each and every month, the interest goes up to the regular rate of the card (which is often high), or if you make one late payment, you forego the lower promotional rate, and the rate again goes up to the regular rate of the card.
#4 If you keep making your minimum payment only, your balance will rarely ever get paid off. Have you ever noticed how while your minimum payment due on your credit card is $85, your balance only came down $12 dollars? WHY??? That’s because we pay UN-Godly amounts of interest on credit cards. Even the so-called “low-interest rate” credit cards don’t show their payments going toward bringing down their balances. All they do is just require a lower minimum payment. Sure, this might help your monthly outgo right now, but what’s it doing to get you out of debt faster? NOTHING! That’s because the MINIMUM PAYMENT DUE ON CREDIT CARDS ARE BASICALLY “INTEREST-ONLY” PAYMENTS.
#5 Example: Your rate of 6.9% is a teaser rate. After 6 months, your rate will be 21%. The Teaser, a.k.a. Introductory, rate credit card has made credit card banks and centers BILLIONS of dollars. Because so few consumers ever read the FINE PRINT. You know, the print that only the eyes of a 12 year old can read without getting a migraine? These credit cards come with stipulations. There are too many “catches” to name. But I assure you, they are there. Credit card banks don’t make any money if they are financing your debt at below Wall Street Prime interest rates. So I leave you with one last thought on this topic, “IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS.”
#6 Most credit card payments are due on the last day of the month or the first day of the month. Most of us get paid on one of those two days also. If you pay your bill on the first and send it in the mail, payment is probably posted sometime between the 5th and the 10th of the month. Many credit card banks not only regard that as a late payment, but they charge you a late fee and interest on the entire balance. How are we suppose to ever get ahead???
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