Monday, May 13, 2013

Things That Credit Card Companies Tell You That You Should Not Follow

Credit card companies are in it for the business so you need to be careful about what they say you should do with your credit card. Keep in mind that they want you to be in debt to them because that is how they will extract profit from you. There are many things that you should be cautious and vigilant about.
First of all, when you find yourself under a pile of credit card debt, you should not believe how your creditors want you to pay it off. We are talking of minimum payments of course. If you think that this particular method will get you by, then you are wrong. It will keep you from late payments - yes that is true. However, you will stay in debt for a really long time! And your creditors want that because the longer you stay in debt, the more interest you will end up paying for. That means more profit for them. So what you should do is to pay more than the minimum. If you cannot afford it, there are debt relief companies who can help make your payments more manageable so your limited income can accommodate all payments that has to be funded. Of course, another option apart from debt relief is to simply increase your income. That way, you have more funds for your debt payments without sacrificing your basic expenses.
Another popular creditor suggestion that you should ignore is getting a higher credit limit. This will put you in a deeper credit card debt pit so it is best for you to just say no. We all have the tendency to max out our cards without really thinking about how much we can really afford. If you know that you will be in danger of using your card up to its limit, then you need to make sure that the limit something that you can afford to pay off. That is your short term goal. However, your long term goal should be to remove that dependence on credit cards altogether. Develop the right habits that will help you live within your means. Paying for things in cash is not bad and when combined with budgeting habits, it will keep you from spending too much.
When you are convinced that you need to have at least one credit card to your name, make sure that you understand it completely. Know every fee, charge and penalty that can be imposed on you. Most importantly, you should understand the rules when it comes to your interest rates. It is confusing but you have to take time to learn it. You can call the customer support and ask them to explain it to you. Sometimes, credit card companies suddenly raise their rates and you want to make sure that you know about your rights when they do. For instance, the Credit Card Act states that creditors should send a notice before raising their rates. That way, card holders can pay off their balance before the new rate takes effect. Know these and you should be able to avoid wasting money on high interest amounts.

All in all, knowledge is your best defense when it comes to debt so read about it so you can make better judgments and decisions when it comes to getting yourself out of debt.

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