Credit cards have become the primary way of spending for most people in the United States. Most people just swipe and go for regular expenses like gasoline, grocery, bills, and so on without realizing that this is among the top causes of debts not only in this country, but in many parts of the world as well.
Some people look at cards as if they are the best thing ever. They think that the ease and convenience plastic money offers are a blessing to their lives. But most of the time, it is the other way around. This is because many people are hardly aware of the hidden pitfalls that card issuers lure the users into. Knowing the common dangers of credit card use should give you a heads up of what is really happening.
1. Universal default penalty – Most people probably do not know this but card issuers check their customer's credit reports for late payments. If you have late payments on your report, they would use this as an excuse to increase your card's interest rate even if the err in late payment was not made for this particular credit card issuer.
2. Reduced grace period – Grace periods used to be 30 days long. Now, they are generally 23 or 20 days while some cards don't even have a grace period at all. Many are not aware of this.
3. Inactivity fees – Do you think that you are saving money by not using your credit card? Well, if it is still in your wallet, it still incurs debts even if you don't use it, thanks to this thing called inactivity charge that can rob you with at least $ 15 of your money if you don't use your card in six months.
4. Late payment – Not only are fees for this exorbitant, this also gives the credit card issuer the reason to hike up your interest rate into something that you would not really agree with. Many people are faithful with their credit cards payment but even when they miss payment once or twice, issuers grab this opportunity to milk fees out of the user or increase the interest rate.
5. Paying the minimum – Don't you notice that more often than not if you call up the credit card company, its customer rep would first give you the minimum balance you need to pay for before the total amount? Sometimes, they miss the total amount altogether. This leaves you thinking that it is all right to pay only the minimum, when in fact that is financial suicide because the principal debt only grows bigger and bigger and the interest rates only charge you more and more.
6. Freebies – Get this and that for free-you'd think you're getting your reward but these are just things to lure you into spending more and using your credit card more often. Ignore these freebies. If they come along then good but never make purchases just to get your hands on them. If you want something so badly, save up for it and pay for it in cash. It is actually cheaper this way and you don't end up with so many other things you don't really need.
7. Over-limit fees – Credit card issuers can charge you as much as $ 25 to $ 40 if you go over by your credit limit even by just a cent.
8. Balance transfer fees – You would be offered with an introductory rate to transfer your balance that is so temptingly low that you just could not say not. But the overly attractive low rate comes with a huge transaction fee that issuers would not mention on purpose. Sometimes, they do put it in fine print that is so small that you would actually need a magnifying glass just to be able to read those minuscule letters.
It is true that many people are in debt today because of credit cards. These cards seem to have some kind of magic that make a lot of people lose control. It is no wonder that credit card debt consolidation loans are in boom these days. This type of debt consolidation loan, which is available from both private and federal debt consolidation services help people in paying for their credit cards debts by combining multiple loans into one with a lower interest rate.
But don't think this process is an easy way out to credit card problems. Don't make the mistake of thinking that it is okay to overspend since there is this thing called "debt consolidation" that will make things better in the end. The smarter thing for anyone is still this-stop using your credit cards!