Monday, January 14, 2013

Common Credit Card Traps

Credit card agents are everywhere now—in the malls, marketplace, the lobby or entrance of some buildings and establishments. Mostly these people are nuisances. How come?

Credit cards supposedly are made for the sake of our convenience. But nowadays, people see them as traps that will damage our bank accounts further.

Working With Credit Card Companies

Credit card companies compete to get clients as much as possible. The more, the merrier! Because of this, we see many advertisement offering amazing deals that blow us away. We are attracted to spend and spend until we run out of resources only because we believe that credit card promotions can save us.

By learning the common credit card traps, you will know how to cope up better and free yourself of credit later.

Common Credit Card Traps

1. 24 Months to Pay Scheme

The advantage you get is that you will be able to pay for everything. But this acts also as a double-edged sword. Even if it's 24 months or 26 months at that, you will still have to pay the same amount. The only difference is the number of gives. So you are somewhat fooling yourself into believing that you are paying less in every month and you get to spend more. The end result is that you will cash out and have more expenditures.

2. 0% Interest

No business will ever give their customers all the perks and they have to suffer the consequences in return. Think that if these lending companies or credit card companies offer 0% interest, what will be the implication for their business? They are in the service of helping you achieve the things you want to buy. And they want to promote the customer's trust and loyalty.

But in the same way, they can take off the 0% interest rate when they reach their loss. Yup, truth be told, this is very unfair of them. Banks can claim that the interest-free period has ended, and additional charges will be levied to you. So the best advice here is to make sure that you read all the terms and conditions before purchasing stuff with a 0% interest promo.

3. Cash Advance

Sometimes, you are just in short of cash. Particularly, when you run your own business, you don't have a stable income and you may want to avail of the cash advance scheme of banks. Things look pretty at the beginning. You apply for the cash advance and make that leap.

Little did you know that this cash advance scheme incurs a much higher interest rate! It's common that you won't enjoy the 0% interest rate. So be wary. Else, you might end up being stuck at paying for piles of debt from those interests and also the principal amount of money with additional penalty fee for late payments.

4. Credit Balance Transfer

You may not be aware but banks and lending companies make returns by allowing credit balance transfers. This transaction is free in some banks but not to others. For instance, you have two accounts and the first account is short of $300. You need to issue that amount else your check will be put on hold or cancelled. This will destroy the image of your company so you requested the bank to transfer that amount of $300 to the account that has insufficient funds.

Transferring of balance incurs a small percentage to your outstanding dues, if you have not paid all your debts from the bank. This interest will then be summed up to your credit balance.

End Notes

Credit card promotions are all eye-catching, sparking our interest. But there can be one too many common traps you need to get out of before it's too late. To avoid these credit card traps, think that you are spending cash. Spend only as you can. Don't take credit you cannot afford to pay back on time.