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Credit Card Entrapment - The Secrets are Out
Have you ever wondered why your credit card bill is so high
and you can't seem to pay off the balance? Well you are not alone
in this. You should be aware of a couple of trick that they use
and you probably don't even pay attention to it, but you
definitely pay for it and BIG!
The next time you open up your credit card statement, take a
real close look to all the "junk" inside particularly the very
hard to read insert Call "changes to you credit card agreement".
That's right the one you always throw away or say that I'll read
it later and never really do. Since you neglected to read all
that fine print you just threw away you should realize what you
just did. In essence you just agreed to all the changes the
credit card company made IF (and that's a big "IF") you use your
credit card again. Most people do and don't even read all "that
stuff" in the envelope with their statement. Since these were
automatic changes effective immediately or on a specific date
that they set in the new terms and conditions.
Some of the ones the credit card companies use most often
include, but not limited to, changing your APR (annual percentage
rates) you thought that 0% would last forever? Changes to your
existing fees and/or adding new fees. Let us not forget that they
also like to change your grace period, the time that you can pay
it off and not receive a finance charge.
If you don't know or you don't keep track of your credit
limit...stop using it! If not you will get yourself into this
next little fix. When ever you do go over the limit (they make
sure and give you a little slack so they have an extra fee to
charge) they hit you with an "over the limit fee" making you more
over the limit and making you pay down your balance even more or
you will face yet another over the limit fee the following month.
There is nothing like a little $35 or more fees to cheer you up
when you have to pay your bills.
If you really like higher rates on your credit card then just
make sure the payment is late, that is a sure fire way of getting
an increase in you APR. Some credit card companies go as far as
saying your payment is late if not received by noon or 1 p.m. on
the payment due date. Thanks for another $29 or more fees are the
likely response from the credit card company. If you are a
procrastinator and wait until the last minute to put money in the
bank for your check to the credit card company to clear then you
need to be very careful. With all these new high tech devices we
have these days they are a lot more efficient at processing their
money taking days shorter than they did even 5-10 years ago.
For the ultimate procrastinator who will wait until the last
minute and pay online. Once again the credit card companies will
most likely make you pay for that convince. I have seen anywhere
from $1 to $15 just to make your payment online.
This one is my favorite one and it took me awhile to figure
this one out, because like you I really just didn't pay
attention. And man did they make me pay for it too. Some credit
card companies offer cash advances. You really have to think to
yourself "How good of a deal is it really going to be?" after all
they already charge 15%-18% or higher!
Why is it such a bad deal?
I'm glad you asked.
In most cases when you use your credit card to withdraw cash
more fee kick in:
- A cash advance fee is normally an up front fee any where
from 2%-4% of the cash you take out
- The cash advance on the credit card ALWAYS has a higher
interest rate than your normal purchases
- The interest starts as soon as you get the money out of the
ATM
- Many of the credit card companies also require that you pay
off all the balance from your purchase before you can pay off
your cash advance.
Here's a little example on how they get you with those extra
fees:
Let's say you regularly charge $200 dollars a month with
purchases on your credit card and you keep a running balance on
your credit card of $1000. If you went out and needed cash right
away and took out a $100 cash advance you would have to pay off
the $1000 dollars before you would be able to get to paying off
the cash advance. Now let's not forget the $200 you put on every
month that you would have to pay off before they would pay off
the cash advance. I was going around in circles on this one for
years before I figured it out.
Free advice don't use a cash advance unless you absolutely
have to.
Taking the time to read the little "junk" the credit card
companies send you in the mail and knowing where all these fees
go will save you a lot of money in the long run.
Mical Johnson is affiliated with Rock Financial, Inc., a
Licensed Correspondent Mortgage Lender, Florida Department of
Finance. Mr. Johnson hosts Home Buyer's Seminars which are open
to the public each month in the TampaBay area in Florida. To
obtain a free copy of Mr. Johnson's Home Buyer Handbook contact
him at http://www.TampaMortgageGuy.com.
He is also a contributing author at http://www.Debt-Free-Personal-Finance.com
MORE RESOURCES:
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