Beware of getting caught in the credit card traps being created by our financial system.
IF you have the money to pay off the credit card when the statement arrives, using the card is not bad.
But, purchasing things with a credit card when you don’t actually have the money, is simply committing your future earnings to the credit company with the threat of a black mark on your credit rating. That is economic slavery.
Over the past few years, debt consolidation experts have assisted many people to get out of the credit card trap with debt relief programs. That says a lot about how bad the situation is. Assisting people to do this is not looked on favorably by the credit lenders; after all, they lose all that profitable interest. They create more enticing offers to hook consumers back in with offers like 0% interest for extended periods of time.
Are you really getting 0% interest? You are IF you can pay off the whole amount in advance of the expiration date of the offer. What they are hoping is that you will NOT have the ability to pay it off.
If you can’t pay, what happens then? Carefully read the fine print details on their ‘Terms and Conditions’ agreement. Many agreements have an attractive interest rate in big print; typically it is 9.99% to 12.99%. But, many rates are variable, because that means it is the ‘attractive’ rate PLUS the ‘prime rate.’ The banks charge the prime rate to the credit company to lend them the money, and that gets passed on to you. This alone can add a staggering 6 - 9% in interest on top of that seemlingly low interest rate.
Read further and you’ll see the rest of the trap. If you pay late or miss a payment, they have the right to increase the interest rate to as much as 39%. PLUS, they get to add an additional $25 - 39 in fees. If you owe a balance of $1,000, that equals $52 - 66 a month in interest and fees you are required to pay before you ever get to pay the first dollar of the price of the item you charged.
What other tricks do the credit companies have in their arsenal of weapons to make sure they keep making money from you?
First is that enticing ‘minimum payment’ they allow you to make which is mostly interest, and hooks you into a payment plan that will take you 20 years to pay for what you bought. Second, the credit companys are now inviting you to get money back from retailers or earn airline miles for every dollar you spend.
Who do you think is paying for those credits? Right! You do! The stores pay the credit companies for the cash they give you back, and the stores raise the price you pay.
The credit companys pay the airlines a tiny amount for each airline mile they ‘give’ you when you charge an item on the credit card. On January 1, 2007 in an NBC TV news interview, the president of a major airline stated it only costs the airline company $10 to fly you somewhere when you have earned 25,000 air miles to take a flight.
Who do you think really benefits if you spend enough on your credit card to earn a ‘free’ flight? It does not take a genius to see that trap dressed up to look like a big benefit to you.
Sandra Simmons, President of Money Management Solutions, has years of experience helping company owners and individuals manage their money to achieve financial freedom. To learn more about the Money Management Software she created, watch the FREE 5-minute demo video on her website at www.MoneyMgmtSolutions.com
- Sandra Simmons
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