I'm going to let you in on a little secret.
It really shouldn't be a secret, but many people don't seem to understand that the credit card companies aren't really there to help you.
Credit card companies exist for one reason only: to make money.
Not only do they make money off of you, the consumer, but they also make money off of the merchants.
In other words, they have a pretty sweet deal going! And they also have some dirty little secrets they don't want you to know.
Nothing Lasts Forever (especially those 0% or low-interest introductory rates!) If you bother to open any of those credit card offers you receive in the mail, you've probably noticed that they have a low introductory rate in bold, colorful print in multiple locations on the letter and application.
This has been a great tactic for the credit card companies for several years now.
The idea is that if you can pay 0% interest for 6 to 12 months, you'll find the offer attractive enough to sign up for their program.
Good idea? Maybe it's a good idea, maybe it isn't.
Certainly this is a tactic that Suze Orman has recommended.
Transfer your balances from high-interest cards to these lower cards and pay off your cards sooner.
I'm all for that idea - as long as you actually pay them off.
The problem is, and the credit card companies know this, most people won't pay off the balance within the introductory period.
Now here's the most important part of this dirty little secret the credit card companies don't want you to know.
Scroll down the application to the disclosure box.
This will be the tiny print at the very bottom of the page.
They're hoping the bright, bold, big offer will distract you from reading the disclosure.
This is where you will find out what the interest rate will be at the end of the introductory period.
Oh, and by the way, the end may come sooner than you think.
If you are late with just one payment, the introductory period is over.
If you are late with another one, your interest rate will increase.
That Low Minimum Monthly Payment Have you ever calculated the minimum payment due on your credit card statement? Chances are yours has dropped over the years without you even noticing - and not necessarily because your balance has dropped.
Many credit card companies now ask for only 2% of your total balance as the minimum payment.
And many people are happy to send just that, and not a penny more.
But, here's the problem: you could end up taking 23 years to pay off your credit card balance and, in the process, pay more than 2 times your original purchase price in interest alone! Do you still think that low monthly minimum payment is a good thing? It's actually highway robbery in disguise.
And what about those offers to skip a payment because you're "such a good customer"? This offer usually rolls around at Christmas time or just after the New Year.
It's timed that way on purpose, not to help you, but because they know people typically overspend on Christmas gifts and will take advantage of their offer because they are short on cash.
So, what's the problem with skipping a payment? It extends the time you will continue to pay not only the original debt, but the interest on that debt.
That's right, you might get to skip the payment, but the interest gets tacked onto your balance due.
The bottom line is: always send more than the monthly minimum payment, and never skip a payment.
It's just another trick to move money from your account into theirs.
You can save thousands of dollars with just these two tips.
It really shouldn't be a secret, but many people don't seem to understand that the credit card companies aren't really there to help you.
Credit card companies exist for one reason only: to make money.
Not only do they make money off of you, the consumer, but they also make money off of the merchants.
In other words, they have a pretty sweet deal going! And they also have some dirty little secrets they don't want you to know.
Nothing Lasts Forever (especially those 0% or low-interest introductory rates!) If you bother to open any of those credit card offers you receive in the mail, you've probably noticed that they have a low introductory rate in bold, colorful print in multiple locations on the letter and application.
This has been a great tactic for the credit card companies for several years now.
The idea is that if you can pay 0% interest for 6 to 12 months, you'll find the offer attractive enough to sign up for their program.
Good idea? Maybe it's a good idea, maybe it isn't.
Certainly this is a tactic that Suze Orman has recommended.
Transfer your balances from high-interest cards to these lower cards and pay off your cards sooner.
I'm all for that idea - as long as you actually pay them off.
The problem is, and the credit card companies know this, most people won't pay off the balance within the introductory period.
Now here's the most important part of this dirty little secret the credit card companies don't want you to know.
Scroll down the application to the disclosure box.
This will be the tiny print at the very bottom of the page.
They're hoping the bright, bold, big offer will distract you from reading the disclosure.
This is where you will find out what the interest rate will be at the end of the introductory period.
Oh, and by the way, the end may come sooner than you think.
If you are late with just one payment, the introductory period is over.
If you are late with another one, your interest rate will increase.
That Low Minimum Monthly Payment Have you ever calculated the minimum payment due on your credit card statement? Chances are yours has dropped over the years without you even noticing - and not necessarily because your balance has dropped.
Many credit card companies now ask for only 2% of your total balance as the minimum payment.
And many people are happy to send just that, and not a penny more.
But, here's the problem: you could end up taking 23 years to pay off your credit card balance and, in the process, pay more than 2 times your original purchase price in interest alone! Do you still think that low monthly minimum payment is a good thing? It's actually highway robbery in disguise.
And what about those offers to skip a payment because you're "such a good customer"? This offer usually rolls around at Christmas time or just after the New Year.
It's timed that way on purpose, not to help you, but because they know people typically overspend on Christmas gifts and will take advantage of their offer because they are short on cash.
So, what's the problem with skipping a payment? It extends the time you will continue to pay not only the original debt, but the interest on that debt.
That's right, you might get to skip the payment, but the interest gets tacked onto your balance due.
The bottom line is: always send more than the monthly minimum payment, and never skip a payment.
It's just another trick to move money from your account into theirs.
You can save thousands of dollars with just these two tips.
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