Are Credit Card Companies Really Charging 83.3% Interest?

Normal Credit Card Apr

Everyone pays attention to the interest rate when shopping around for credit cards, but Finance Charge policies are rarely glanced at. Are credit card company’s are really charging you 83.3% interest?   The normal credit card APR ranges from 12%-29%.  When a customer receives a $1000 loan from a bank, the bank in turn has the legal right to charge interest on the rate you borrowed the loan. If, for example, the interest rate were a fixed 10%, cost of borrowing the original $1000 would be at least $1100, in other words, the $1000 loan + $100 finance charge. Banks and credit card companies don’t expect most customers to borrow the loan and pay it back right away, and nor do most people pay on time every month. The bank allows customers a few days after that date to pay their bill, which is called a grace period. Payments received after the grace period can be assessed as late fees or additional finance charges stated by the federal Truth-in-Lending Act.  Learning how to increase your credit score will help you get lower rates.

Credit Card Statements

What Can You Do?

Don’t accept it!

You can phone into your credit card company and ask for them to lower your rate, or your finance charges to be minimized. The key to getting compliance with your credit card companies is to go in with a plan before asking.  If you have a poor payment method, chances are very slim that you will get your rate lowered, or any additional favors added into that mix.  BUT, if you do make your payments on time, that is a huge card you can play.  You have to think of a plan before phoning.  Think of your conversation as a give and take.

“I have made my payments on time for the last year, and I am hoping to pay off my credit card in the next 8 months, can you do better on the interest rate? 

The bank is going to give up a lot of money of interest and finance charges they would otherwise make off of you, so why would they lower your rate?

Most often, it involves a promise to make a certain amount of payments of some sort of give on your end.  We have an additional article that explains how to phone in and lower your credit cards here.  The # 1 success tip is to think in advance what positives you have on your side.  What cards do you hold in your hand?  Do you have a job that is consistent?  Have you paid on time?  Are you eager to make your payments on time?  Are you excited about paying off your credit card?

Disadvantages Of Credit Cards

Read More About The Disadvantages Of Credit Cards

When we phoned in to our credit card companies asking for a low rate we had success and failure.  One credit card gave us 0% interest for one whole year.  We were jumping up and down after that phone call, while the other card, flat out said NO, after talking to a number of representatives.  We decided to move our credit card balance to another card, because some companies will refuse to work with customers who are willing to pay off their debt.  Keep in mind, we did pay on time the entire time we had our card.  Some companies JUST will refuse to take a loss on their bottom line of making money.

The last card, we had to wait on hold on the phone for the manager as the customer representative  declined to lower our rate.  One big tip we can pass on is don’t give up on the phone.  Many people are phoning in and asking for a lower rate, so their customer reps are educated to decline customers.  Most customers think, no means no, so they give up and hang up.  Ask to speak to the manager in charge.  If you do so, be sure to have a plan that details why they should give it to you, and what you will promise in return for a lower rate.

The Disadvantages Of Credit Cards

Disadvantages Of Credit Cards

Credit cards can really be your savior in particular on occasions that you don’t have enough cash inside your pockets to buy an item that is badly required. It can give you the possibility of shopping for a range of items, supplies, services and properties without having to pay for them at once. On the other hand the disadvantages of credit cards can go ignored in the short run, but in the long run it’ll catch up with you.

Disadvantages of Obtaining A Bank Credit Card

Given that credit cards are formed beneath certain terms and agreements that are laid out by their banks, it suggests that whatever non-fulfillment of such may perhaps entail you for consequences. One of the most frequent consequence is having a greater price of payment in particular in the event you usually do not pay around the specified time that the bank expected you to. Additionally, when you are late on your normal payments, it can bring about you to possess negative credit rating which in turn can cause reduced creditworthiness in the future. This suggests that in any occasion that you simply want to open an additional credit account, or probably problem a private loan from a different bank; it might provide you with a reduce credit line. Due to the fact you currently have a negative credit history along with your existing bank, then it might naturally imply that you just do not have the correct sources to fund an additional account, and therefore all your bank applications rejected.

The Disadvantages Of Credit Cards: Overspending Tendencies

Aside from these, due to the fact having a bank card implies that you could purchase definitely anything anywhere, it can result in overspending. It may trigger you to possess plenty of debt inside the future; a debt that may be merely too high priced for you to handle. Given that obtaining a credit card provides you financial freedom to get, it might lead you to be too impulsive and impractical in the things that you just obtain. You then obtain on fancy as an alternative on necessity.

The Need For Budgeting

Getting a huge debt is especially difficult should you are certainly not efficient in regulating your finances or your resources. Exactly the same goes in the event you aren’t giving a specific percentage of the revenue to cover for the debt payments. In circumstances like this, it might offer you critical challenges in the future and points may possibly even attain a legal process whenever you are still incapable of paying off your credit debt.

Confusing Terms And Circumstances

Moreover, credit cards have complex terms and conditions that at instances even the borrower himself will not recognize totally. At times these complications bring about the borrower assuming the wrong issues and thus, making use of the credit card the wrong way. Also often the borrower will not be completely certain in the uses for the different amounts that he’s paying for, for instance more fees like interest rates, service fees and such.

Clearly, to possess credit is indeed an excellent point particularly for those who don’t desire to bring with you a lot of cash constantly. However, it really is such a massive responsibility to personal a credit card that it can be essential that you just your self will have to first recognize the limits that it supplies you. In order for the credit card to assist you within your finances instead of burying you within a enormous debt, you must make sure that you might be totally capable of regulating oneself as to which things are important and that are not just before obtaining such products within the industry.

 

How To Pay Off Debt With No Money

How To Pay Off Debt With No Money

Achieving Financial Freedom is not an easy task.  Credit card debt is one of the most common types of debt and often times the hardest type of debt to pay off. While you may only owe a couple of thousand of dollars on your credit cards, if you are only paying the minimum amount due you could actually end up taking several years to pay off the credit cards and in total pay more than double the amount you actually owe. To avoid this problem, it is imperative that you pay off those credit cards as quickly as possible. As we all know; however, that can be easier said than done. Read on for several tips on how to pay off debt with no money.

How To Pay Off Debt With No Money

Start off by looking at your current budget.  There are online budget calculator and budget worksheets that can help you manage your budget better.  Understand your expense is step to paying off your debt quickly.   http://www.ourdebtfreelives.com has some great articles on decreasing your budget, which will allow you to come up with some extra cash you didn’t have before.

You should take in paying off your credit cards is creating a habit of paying more than the minimum amount due listed on your monthly statement. Generally, the minimum amount due represents only about 2% to 3% of the total balance. Keep in mind that paying only this small amount will take you that much longer to pay off the entire balance and that costs you even more money. Pay as much as you possibly can over the minimum amount due. In the end, you’ll pay off the cards faster and actually save a ton of money.

If you have more than one credit card, take the time to sit down and find out which ones have the highest interest rates. These are the credit cards you need to focus on paying off first because these are the ones that are costing you the most money and will take the longest to pay off. When you finally pay them off you can take the money that you were putting toward paying off that card and apply the same strategy to the next highest interest rate credit card.

“How To Pay Off Debt With No Money?  Moving Credit Card Balances To A Card With 0% APR Allows You To Pay The Balance Quicker”How To Pay Off Debt With No Money 0% APR

Another way you can pay off your credit cards is to take money out of your savings account and investments.  When You’re trying to prepare for early retirement Of course, this wouldn’t be the first choice of many people; however, when how much damage you could be doing to your financial future by not paying off those debts you can quickly realize that it will actually benefit you more to just bite the bullet and pay them off. Then you can focus your attention on building your savings and investment portfolio back up.

You might also consider taking out a home equity loan, if you own a home. With the money you receive through the loan you can pay down or pay off your debt and also obtain a much lower interest rate on the new loan than what you currently have on your credit card debt. In addition, for most people, the interest on the home equity loan will be tax deductible, which your credit card debt certainly is not.  Related Article: Debt Settlement Company

Hidden Facts About Credit Card Companies

Credit Card Companies & Credit Card Debt

Credit card debt is the most common contributor of debt for most people; however, very few people know exactly what credit card companies are allowed to do and not allowed to do when it comes to their credit. Understanding what boundaries credit card companies must abide by can help you to become one step closer to better managing your debt.

First, it is important to understand that contrary to popular opinion credit card companies have the absolute right to raise your interest rate automatically. They can even raise your interest rate if you’ve never been late on a single payment for that credit card. If you are late on any other bill credit card companies can use what is known as a universal default clause to raise the interest rate on that credit card.

Due to increasing public service announcements many people are beginning to understand that their credit score is more important than they may have thought, especially in terms of applying for additional credit. What you may not know; however, is that your credit score can also help to determine the interest rate on your credit cards. The lower your credit score, the higher your credit card interest rate is more likely to be.

What you need to know about credit card companies

Many people may also not understand that credit card companies are not bound by any limits in terms of what they can charge for late payment fees as well as penalties. You may think there is a cap on such items, but in reality the limits were lifted back in 1996 after a monumental Supreme Court case was settled.

In addition, the Federal government does not place any limit on the amount of interest that credit card companies can charge you. Many people believe that credit card companies cannot charge them more than a certain percentage due to government usury laws.

The truth is that these laws were lifted a long time ago, after the Great Depression, as a matter of fact. Furthermore, certain states have usury laws that are either very lax or non-existent. With these type of leeway credit card companies practically have free reign to charge you whatever they want.

Finally, be aware of the fact that it is not big item purchases such as cars and homes that land most people in bankruptcy court. Rather it is credit card debt that causes most problems, simply due to the high interest rates that make it incredibly difficult and time consuming to pay them off.