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Credit Card Dirty Tricks & Traps to Avoid

Jan 27, 2008
Most credit cards are what's called a revolving debt the only real exceptions are American Express and Diners Club cards, which must still be paid off in full every month. The most desirable customers for the credit card companies are the ones who make a payment on time every month but don't pay off the whole balance.

A study by The UK Post Office found that a quarter of credit card holders said they had started the New Year more dependent on real credit than ever before with 41 per cent saying that they would be relying on their credit cards to pay for groceries and other daily expenses.

There are a lot of good reasons to be scared of credit cards, and not to have too many.

Just have in mind that whenever you deal with credit cards, you're playing with fire. We live in an I-want-it-now consumer culture, and we're willing to pay more than we can afford to fund our lifestyles.

Whatever you do, though, don't spend a whole day applying for every credit card you can find, just to see if anyone will take you. If you had bad credit, you couldn't get a credit card at all. If you directly ask why you haven't been accepted, then they usually have to tell you.

"In the UK only an estimated 6.9 million household bills were being either unpaid or paid late over the last six month period" is mentioned by a separate study from MoneyExpert.com an increasing number of credit card holders in the UK have become dependent on their plastic to fund their living expenses, according to recent research. It's not so long ago that being in even a little debt was considered to be absolutely terrible.

You might think there's not that much difference between a card that charges 15% APR and one that charges 12% APR.

The dollar you gave them back was eaten up by interest. There are so many people who just look at the interest rates they're being charged, and don't understand the terrible difference it can make if you only ever pay the minimum payment. They'll send offers to desperate people for absolutely terrible deals, with the highest interest rates they can get away with, and no benefits whatsoever.

Borrowing a lot before you start paying anything back will make you look like a very bad risk, and so will going all the way up to (or even over) your limit on a credit card. Going over your credit limit will result in your card no longer being accepted, and you being charged an over-limit fee.

Now, arrange your debts in order of interest rate, with the highest interest rate at the top. A minimum payment is the absolute lowest amount you can pay back to the credit card company each month you should pay more, but you don't have to.

Do not forget that bankers & credit card issuers are professional negotiators, and you're not. Therefore you have to take care how you deal with credit card debts. When you pay back your credit card debt, most lenders will put your payments towards the lowest-interest money (your purchases) first, and then towards other lending.

You will almost certainly be charged a late payment fee, and your late payment will go on your credit report for everyone to see. If you're in a really bad situation, and you just can't even make your minimum payments this month, don't worry. They'd rather hear from you if you're having trouble, so don't bury your head in the sand.

It is especially important that you talk to your partner they are the number one person who can support you. People with lots of debts don't want to talk about it, even with their family, for fear of upsetting people or looking like a failure. You'll be less stressed about your debts, and your credit report will show that you were able to pay everything back getting you a much better interest rate if you ever need to go into debt again.

The next time your issuer check your credit rating (they usually do it quarterly), they'll spot it and want to raise your rate. You will rarely be able to negotiate over your debts without doing some damage to your credit report.

Your grace period is the amount of time between when you spend money and when you start paying interest on it. Good cards can have a grace period of up to two months bad ones might not have one at all.

Chances are that any interest rate you're offered on a debt consolidation loan will be significantly lower than the interest rates you're currently paying on credit cards. One of the most dangerous things about getting a debt consolidation loan is that, since your credit cards have all been paid off, it can be tempting to accept the next few offers you get for new ones.

After all, now you're saving all this money, you can afford a few more cards, can't you?

A consolidation loan is a loan that you can use to pay off all your debts, meaning that you can pay them off for less money without having to worry about lots of different bills.

In some countries, you might not have a legal leg to stand on your card issuer can do what they like to you. When it comes to Credit Card Issuers, getting it in writing also means that you can hold them to what they say later on.

They'll be able to lend you the money at a much better rate than a credit card would, simply because they know why you're taking the loan and can set regular monthly payments for you to repay it. Anyway, credit card lenders are devious, and there are plenty of things there designed to catch you out here's what you should be on your guard against.

Know Your Local Laws. You're just making some small sacrifices for a while, and your life will be so much better for it in the long run.

If you can't see where their profit is coming from, be suspicious it's probably all a big scam that's going to cost you money, even if you don't realise it. With more unscrupulous companies, you will often be charged an annual fee, an application fee, and any other fee they can think of, all of which are added to your debt.

There are limits in law on how much interest credit unions can charge, and they don't need to make a profit for owners or shareholders, because they don't have any.

Charging interest monthly instead of yearly is a trick to make it feel like you are paying a very low price for your borrowing. If you plan to use your card abroad, you should take a look at how much the card charges for transactions made in other currencies. If you spend much with the card, this can add up to a tidy sum.

Don't worry if you don't understand all the maths involved here with credit card interest rates; it's been deliberately designed by mathematicians and marketers to be as confusing as possible, to stop you working out what a bad deal you're getting. After all, if you haven't read this, would you really ever turn down a month off paying your bills? Be Always Aware of The Damage to Your Credit Report.

I sympathize: paying credit card bills is a surprisingly difficult thing to do reliably and consistently. It's money you should have been spending instead of making purchases with a credit card.

Yes, it feels better to save. Saving feels like building a foundation for your future, while paying off debt feels like throwing your money down a hole. That money is for the kids' education, or for improving your house, or whatever else and it's in an account earning a good rate of interest. What could be wrong with that?

Christos Margetis
About the Author
Christos Margetis is available for interviews and public speaking. The tips in this article were extracted from Chris's award- winning website. ClickGoFind offers best information and reviews for Credit Cards UK and financial resources information.
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