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Pitfalls of the Credit Industry
The credit industry if rife with pitfalls. If you have ever
owned a credit card you probably already have learned this the
hard way. If you have not owned a credit card previously you
should definitely learn all you can about these convenient little
suckers (literally) before you commit to any contract.
While not all credit cards are the same many do have similar
things in common. For instance they will all charge you interest
on your purchases. The only difference there is the amount of
interest and how long after you make your purchase that you begin
getting charged the interest.
Most people assume that they will not be charged interest for
at least a month. This is called the grace period. The thing is
that not all credit cards have the same length of grace period.
Some companies have 15-day grace periods and others have none at
all. This is the kind of thing that you need to find out before
you ever make a charge on your card.
When you apply for a credit card you may be offered a lower
interest rate. This "introductory rate," as it is called, is most
likely only temporary. Once you have owned the card for a few
months your interest rate will go up substantially. And the thing
is that credit card companies can change their interest rates
whenever they feel like it. Did you know that? It's true.
There is a clause in most credit card contracts that allow for
the lender to up their interest rates at any time as long as they
give you 15 days notice. No matter what rate is quoted in your
contract they have this right.
One of the common myths people succumb to when using their
credit card is the belief that paying of your balance every month
is a good thing. Well, surprise, it's not. People who do not
carry a balance on their cards are considered to be "deadbeats/"
That's right the responsible, conscientious people are the bad
guys. Creditors don't like them because by paying off their
balance all of the time they are not letting the lenders make any
money off of them. The interest is why they give you credit in
the first place, that is their bread and butter. If you were not
paying interest why would they want to bother with you?
If you are a deadbeat there is a better chance of your credit
card company raising your interest rate or even eliminating your
grace period. You might even begin to be charged annual fees for
your card. Credit is not free after all.
Credit cards are a great tool to have at your disposal. They
can help you get out of a jam quickly and easily, but don't let
yourself get carried away by the convenience that they offer. Try
to keep your credit card spending to a minimum and you will find
in the end you are much better off.
Martin Lukac, represents, #1 Loans USA, a finance web-company
specializing in real estate/mortgage market. We specialize in
daily updates, rate predictions, mortgage rates and more:
http://www.1LoansUSA.com
MORE RESOURCES:
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