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5 Things Your Credit Card Company Keeps Quiet About
Credit Cards can bankrupt you if you let them run away from
you. The various Credit Cards companies are in it for profit so
they will not generally alert you to things you can do to save
yourself money.
Here are a few secrets that the card companies try to keep to
themselves:
- Minimum Payments - If you only make the minimum
payment appearing on your credit card statement, then on an
average balance of $4,000 each month, it will take you over 40
years to repay the balance. It means there is no real time set
down for you to pay the debt back.
It's an open-ended type system and it is in the interest of
your credit card company to let you pay only the minimum amount,
because they get high interest on the outstanding amount month by
month.
It is in their interest that you are in debt, because this is
their business. Once you pay back your debt, they no longer have
an income. Most credit card companies will let you pay off your
credit card balance forever if you let them.
In fact, a lot of credit card companies do not like you to
have your credit card at a nil balance from month to month
because it slashes their income considerably.
- Just Keeps Going - When you take out a normal loan
it is usually for a particular term and therefore your
repayments are geared to clear the loan by the end of the term.
With credit cards however, there is no fixed term and therefore
there is no end set down. Someone said it's like the energizer
bunny seen on TV that just keeps going, and going and going and
going.
- Teaser rates - Credit card companies usually have
what is known as a "teaser rate". This is a low rate, which
encourages you to take out a card. After a period, (usually 6
months) it's bumped up to a very high rate. This introductory
credit card rate is heavily advertised, but what you don't see
is the fine print.
The fine print (which is so small that you need a magnifying
glass to read it) clearly sets out the conditions, and one of
these is that the rate will increase. Be careful, because like
any other offer or business opportunity put before you - if it
sounds too good to be true, it generally is.
- Before Due Date - Remember that credit card payments
are due mostly on the last day of the month or on the first day
of the next month, or on the date shown on the credit card
statement. You must ensure your payment reaches them before
that due date or you will be hit with a late charge. What also
happens is that you will be charged interest on the entire
balance from the time the balance was debited on to your credit
card account.
It is very difficult for you to win with your credit card in
this type of scenario. The moral is to make sure you pay your
credit card off so there is a nil balance each month and if you
cannot afford to do that, then always pay the minimum amount and
pay it by the due date.
- Watch Promotions - You need to watch promotions
where credit card companies offer you incentives to transfer
your credit card balance to their card. They usually entice you
with a lower rate of interest and it really sounds like a
generous offer. However, just check that there are no
catches.
With some cards, if you don't charge something new on the new
card each month, the interest jumps up to the regular rate for
that credit card, which is usually very high. If you make a late
payment, the promotional rate disappears and you will be hit with
the regular high rate. You have to carefully check out what's in
the offer, and if necessary ask questions before you accept the
proposal put before you, however attractive.
Copyright 2005 StartRunGrow
http://www.startrungrow.com
StartRunGrow (http://www.startrungrow.com) is
a global online information organisation that specialises in
creating, developing and marketing business help information
specifically with the aim of "making business easier" for
entrepreneurs around the world. The StartRunGrow objective is to
become a dominant player in the business help arena providing end
to end solutions for the millions of small and medium businesses
worldwide who continue to struggle daily with the difficulties of
starting, running and growing a successful business.
MORE RESOURCES:
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