You just got another credit card offer. Great. Someone must really like you, right? Well, you got half of it right. They like your money!
Before you start dreaming of a sunny Caribbean vacation with your new spending power, there are a few things you need to know. Especially if you’re hoping to rent-to-own with the intention of buying your own home within the next couple of years – or be debt free in your lifetime. If you just use a little common sense now – you can save yourself from financial disaster a few years down the road.
# 1 – Debt addiction
It’s too easy. Buy now. Pay later. It’s a simple concept, but it’s brought the world’s economy to its knees. You’d think we would be smarter than this. But this has nothing to do with intelligence. Debt is an addiction. Cigarettes. Alcohol. Cocaine. Credit card. Choose your poison. And just like drug rehab and Alcoholics Anonymous – there are credit counselors who work full time just trying to help people get their debt under control.
# 2 – Never ending balance
Credit card companies LOVE when we sign up, charge a whole bunch of expenses, and then make the minimum payment. If you have a $10,000 balance, you’ll still be paying it off more than 30 years from now!
Compare that with taking out a loan to buy a $10,000 automobile. Five years later – it’s over. You’re out of debt and you own the car free and clear. But that’s not the case with credit cards. They are “revolving” accounts. They are open-ended, as in “NEVER ENDING!!”.
Credit card companies happily let you keep paying the same $10,000 balance forever!
# 3- Transfer trap
This is one of the deadliest, nastiest games the credit card companies play. They know your weakness. It’s so tempting – just transfer all of your balances to one card and you’ll only paying 9.9 percent.
But be careful!
If you are even one day late, the interest goes back to its regular cutthroat, bleed you ’til you die rate.
Sometimes, if you don’t charge something to the card within the month your rates go up. And to top it all off, your new interest rate is only going to last for six months. After that, the banks are hoping you have racked up so much debt that you can’t pay it all off and now you pay the regular rate for years to come.
All I can say is…
“Read the fine print!”
Above all, don’t fall into the trap of using credit cards to try to get out of debt. You can have the best of intentions, but it simply will never work. Instead, give us a call and we’ll show you how to put together a plan to get rid of your debt once and for all.
# 4 – Minimum payment misery
You keep paying your minimum payment. Say you pay $85.00, but your balance only comes down $6.00. How can it be? That’s how high the interest rates are! Want to shave YEARS off your credit card payments? It’s pretty simple. Just double the minimum payment you pay each month to 4%.
# 5- Fine Print Fiasco
Very few consumers ever read the FINE PRINT. There’s a reason for that. It’s so small and difficult that only a 12 year old can read them without getting a headache. But consumers’ failure to read and understand these pesky little “details” has cost BILLIONS of dollars – making the credit card companies very rich at your expense. There are too many catches and stipulations to name in this report. But just remember, IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS.
If you want the lowdown on all the terms & conditions and how they affect your financial health, then call us for your free Financial Freedom Analysis.
# 6- The cruel cost of cash advances
You do NOT get a grace period on cash advances. That means you start paying interest the minute the money is in your hand. To add insult to injury, the interest on cash advances are typically higher than the already ridiculously high rates on credit card purchases. The next time you’re tempted to get some cash out the ATM with your credit card, remember that the rate can climb as high as 30% – similar to late payment fees! This is just one more way the credit card companies separate you from your money.
# 7 – Hidden/Unexpected fees
You may think you’ve done well if you land a credit card with no annual fee. But in reality, “no fee” credit cards can cost you more in the long run!
Well, for starters, you’ve got ”late fees”.
Then you’ve got “over credit fees”.
Now how about some “card replacement fees”? It all adds up.
# 8- Sneaky Interest Calculations
A late payment to ANY creditor can skyrocket your interest rate on your credit card. If you miss a car payment, cell phone bill – or ANYTHING – your interest rate could leap to a massive 25-35%! A late payment anywhere – even if you’re on time with your credit cards – can trigger this penalty. It’s called the “Universal Default Clause”. Supposedly, it protects the credit card issuers from folks who are credit risks. As if these multi-billion dollar corporations need protection from people like us!
# 9- Two-Cycle Billing
If you don’t pay your entire balance each month, then your bank may retroactively eliminate the grace period. Impossible?
This is just one more way they charge us more interest than they should.
Now you’re armed with everything you need to know to stay out of debt forever. Of course, it is easier said than done. At least these tips should give you the tools you need to stay the course or at the minimum, right it.