3 credit card tactics you must avoid
[singlepic id=1 w=300 h=200 float=left]If you are in the market for a credit card, here are three important tactics that these companies use to entice you to sign up. There are many credit card tricks that you just have to watch out for these days. The banks and credit card companies are always looking for new ways to get you to fork over as much money as possible.
1. Like the old free interest period one. You get the offer of a credit card with a free interest period as long as you make the minimum payment. But what happens when that free interest period is over? If you haven’t paid off your entire balance, you can be hit with interest that’s retroactive to when you got the card. That free interest? It was really running the whole time.
Of course, if you’ve paid everything off, it’s not problem. But if you’ve done like the bank expects you, then you will have a total near your limit and not enough money to pay it off. The bank just hit the jackpot
2. Then there is 0% balance transfer game, in which a bank entices you to move your balance over from an expensive card to their card. First there is the free for doing the transfer that the bank makes, which averages about 3 percent of the total balance.
Then there are the new purchases on your card that the bank wants you to make. Why? Because the money you pay for your payments from then on will go to your zero percent interest balance first, the bank has more time to charge you a larger amount on your new purchases.
The banks like to roll out zero percent offers before the Holidays, to make sure you are going to spend at the higher interest rate while working to pay off the big balance your transferred.
3. Another “benefit” that the credit card companies roll out is credit protection insurance. The plan helps you with your minimum payments in case you are unemployed or disabled. The amount of the premium is based on your balance, but when you look at the fine print, you will see that if you have a $10,000 balance, it will cost you $89 per month for insurance in order for you to make the minimum payment if you can’t. That’s could be as little as $10 or 2 percent of your balance! You are paying $89 a month so you can afford to pay $10? Or $200 in the case of a $10,000 balance? Why don’t you just save the $89 and put it toward your balance. Of course, that’s not in the best interest of the credit card company.
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- 6 Comments... What's your take?
Living debt free is the phenomenon of having credit available, using it wisely, saving religiously and planning accordingly. Some financial gurus explain that living debt free means having no debt at all, but the definitions of ‘debt free’ range from not having any debts to using credit wisely and productively and controlling the debt. Every family has to lead a debt free lifestyle by having a committed frugal household budget planning with the help of the Simple Debt Free Living Plan
reply to this commentI think you are thinking like sukrat, but I think you should cover the other side of the topic in the post too…
reply to this commentHow you plan to use your credit cards will help you choose which offer is the best for you. For instance, if you pay off the balance in full you may want to select a card that offers no annual fee or has frequent flyer miles, as you will be less concerned with the finance charges. If you carry a balance, perhaps the lowest possible interest rate is the most important factor in selecting the right credit card. I used Bills.com as my resource to determine which credit card offer is the one for me.
reply to this comment[...] 3 credit card tactics you must avoid | Debt Education Alliance [...]
[...] Ms. Smarty Pants Know It All wrote an interesting post today onHere’s a quick excerpt If you are in the market for a credit card, here are three important tactics that these companies use to entice you to sign up. There are many credit card tricks that you just have to watch out for these days. The banks and credit card companies are always looking for new ways to get you to fork over as much money as possible. 1. Like the old free interest period one. You get the offer of a credit card with a free interest period as long as you make the minimum payment. But what happens w [...]
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