Beware Paying the Credit Card Minimum PaymentWritten by Johann Erickson
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RateMonthsYearsInterest 9%635.8$258.46 12%69 5.75$389.16 15% 796.58$579.48 18%998.25$987.05 24%42635.50$7,521.85
By time you zero out a card with 18% interest, going rate today, you’ve added more than 50% of total you spent on purchase in interest charges during eight plus years it took to repay.
So what, you got a low rate? Perhaps you were offered a low rate of six or nine percent during a card issuer’s promotional period. Naturally you used card to charge items until you reached your set credit limit. After a specified period, maybe six months, that promotional rate will end and your interest rate will increase to 12% or more.
And heaven help you if you incur any late charges. This year almost all credit card companies have raised their late fees to $35 from $29 in 2004. But that’s not all they will do. If you’re late on any card that you use, expect to see that rate increase dramatically. Up to 24% or higher depending upon area in which you live. Unbelievable? It can happen faster than you can blink.
Unsecured cards are bad enough. Secured cards targeting those with credit problems are worse, usually starting at 24%! Add late, overlimit and credit line increase fees, and you can see what a masterful trap credit can be. All of fees add up quickly and interest is charged on everything.
So before you reach for your card and make that impulse buy, think again. Pay cash. Cash makes you live within your means. Buy when stuff is on sale. Avoid minimums. If you use credit, pay amounts above minimum to shorten your repayment time and lower your costs. For more credit repair tips, please visit us at Helpful Home Ideas.
Johann Erickson is the owner of Online Discount Mart and TV Products 4 Less. He is also a contributing writer for sites such as Helpful Home Ideas. Please include an active link to our site if you'd like to reprint this article.
| | Moneynet adds weight to intelligent finance with new personal finance product guidesWritten by moneynet
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when they left home. This is particularly serious as store cards often present highest rate of interest, indicating either a lack of awareness or understanding on part of consumer, or worse a lack of concern about possible consequences. A survey published last year by Office of Fair Trading showed that whilst 60% of cardholders thought they had a good understanding of credit cards, they were unable to answer specific questions or extract key information, such as APR, fees for late payment or cash withdrawal.There are currently three guides available on http://www.moneynet.co.uk, covering credit cards, mortgages and loans. In addition to explaining different aspects of credit application, moneynet also offer a glossary of key terms in resources section to help visitors gain a complete understanding of best product for their needs. Further guides are due to be published later this year.
Moneynet.co.uk is the UK's longest established, online personal finance research and data website. E-mail: INFO@MONEYNET.CO.UK Telephone: 020 8313 9030 Website: http://www.moneynet.co.uk ADDRESS: Moneynet Sussex House 8-10 Homesdale Road Bromley Kent BR2 9LZ
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