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:
 Telegraph.co.uk | Citigroup Posts $2.5 Billion Loss on Write-Downs New York Times, United States - By LOUISE STORY Hobbled by the credit crisis at home, Citigroup has limped through nine months in the red, reporting a $2.5 billion quarterly loss on Friday ... Credit Costs Weigh on Citigroup Citigroup credit default swaps narrow 15 bps-Phoenix Credit Costs Weigh on Citigroup |
 The Money Times | Ackermann says credit crisis end in sight Financial Times, UK - Josef Ackermann, Deutsche Bank’s chief executive, on Thursday said the credit crunch was at “the beginning of the end” as banks and regulators have taken ... 2nd UPDATE: JPMorgan 2Q Net Down 53% On Credit Woes, Markdowns JP Morgan: The Legacy of the Credit Crunch Why No Outrage? |
Studying up on credit scores Chicago Tribune, United States - In matters of money, a credit score assesses your financial responsibility. And just as with taking your first practice test, your score may be low when you ... Given a Shovel, Digging Deeper Into Debt |
Dollar Rebounds From Record Versus Euro as Credit Turmoil Eases Bloomberg - The US currency also rose versus the yen on signs US investment banks will withstand credit-market losses and the Federal Reserve and the Treasury proposed ... |
 BBC News | Credit crisis: Merrill Lynch to sell Bloomberg stake and keep HQ after Tehran Times, Iran - The loss was due to write-downs of $9.4bn on the value of mortgage holdings, credit-related derivatives and instruments guaranteed by crisis-hit monoline ... Merrill Drops After $4.65 Billion Second-Quarter Loss (Update2) Quarterly loss at Citi smaller than expected, but Merrill disappoints BlackRock shares soar on earnings, Merrill stake move |
$10m W/Bank Credit: Boom time for small-scale mining The Punch, Nigeria - This was the scenario, which the World Bank set out to help Nigeria change in 2005 when it granted the country $120m credit under the Sustainable Management ... |
Mortgage sales pressure fuelling credit crisis: ACTU ABC Online, Australia - The Australian Council of Trade Unions (ACTU) has accused banks of fuelling the credit crisis by forcing staff to push mortgages onto people who cannot ... Banks 'pushing' families into debt Banks lean on staff to push loans |
No deals for debits at the pump Detroit Free Press, United States - I would have paid the same price if I used a credit card. Bring the Benjamins and you'd get that super-low price -- OK, low by today's standards -- of ... Gas stations turning to using 'gift |
Teton County development plagued by credit crunch Fox 12 Boise, ID - Developer Bill Reid said a nationwide credit crunch prevented him from winning more financing for the 1350-acre Huntsman Springs project. ... |
Deals and takeovers are being done despite the credit crisis Telegraph.co.uk, United Kingdom - So, tapping the credit market for a cool £10bn to finance the acquisition of companies such as Alliance Boots or J Sainsbury is simply out of the question ... |
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