I received my December credit card monthly statement from my credit union and the minimum monthly amount due displayed zero. When I first saw the amount I thought there was some kind of mistake. As I read further down the statement there was a note that offered me the option of skipping my December monthly payment.
It sounded good but upon further reading the skip a payment option came with a "gotcha". You could skip a payment but interest would still accrue on your balance. So, on my January statement I would pay two months worth of interest plus whatever charges I made during the next month. Well, I declined the offer and sent in a payment for my December statement.
Skipping payments only reinforces bad spending habits. It seems easy and convenient but costs you more in the long run. The longer it takes to pay off a credit card bill, the more interest and finance charges accrue. The only one benefiting is the credit card company. If you are experiencing a financial crisis and are offered a "skip a payment" option here are some things to consider.
1. Don't skip a payment if your credit card balance is 50% or above the credit limit
2. Don't skip a payment option as a solution to a financial problem
3. Don’t skip a payment if your credit card is maxed out or you are close to maxing out your credit card because the missed payment may put your over the limit and cause you to be charged an over-the-limit fee
4. Don't skip a payment more than once
5. Use the skip a payment option only if you can afford to make the minimum monthly payment
6. The skip a payment option cannot be used for balances over-the-limit
If something sounds too good to be true, it usually is.
Showing posts with label creditor tricks. Show all posts
Showing posts with label creditor tricks. Show all posts
Friday, January 22, 2010
Friday, October 30, 2009
Can the CARD Act Stop Creditor Tricks to Keep You in Debt
Credit card companies use hundreds of tricks and gimmicks to keep consumers in debt. According to R.K. Hammer, the credit card penalty fees revenue will reach $20.5 billion in. Credit cards generate more than $2.5 trillion a year. The credit card industry is one of the largest fraud industries in the country. Here are some common traps credit card companies use to keep consumers in debt.
1. The minimum payment trap keeps consumers in debt and in most cases is not enough to cover the interest and finance charges that accrue each month which is why when you send in a payment your balance either doesn't go down or only goes down by a few dollars.
2. No maximum interest rate for credit cards and is not government regulated. Interest rates are regulated by each state.
3. High late fees are charged either when payments are sent after the due date or sent on the due date although the payment was received on time.
4. Credit card monitoring and credit card insurance. There is no need to purchase credit card insurance because there are so many stipulations when signing up for the insurance that it is to your advantage live below your means to pay down debt.
5. Some credit card term change as the wind blows and makes it difficult for consumers to keep up with the changes.
6. The credit card agreement or disclosure is created using fine print to make it difficult for most consumers to read and those who try to read it get frustrated because of the fine print. However, this document is very important and should be read because it tells you all of the restrictions and guidelines for using the credit card.
7. The payment address or due date may change as a way to confuse consumers so their payment arrives late and they get charged a late fee.
The CARD Act of 2009 will eliminate many of these creditor tricks but the credit card companies will still find ways to work around the law to make money. It is best that you read everything you receive from your credit card company, ask questions and know your rights as a consumer. You can find information on the ftc.gov/credit site.
1. The minimum payment trap keeps consumers in debt and in most cases is not enough to cover the interest and finance charges that accrue each month which is why when you send in a payment your balance either doesn't go down or only goes down by a few dollars.
2. No maximum interest rate for credit cards and is not government regulated. Interest rates are regulated by each state.
3. High late fees are charged either when payments are sent after the due date or sent on the due date although the payment was received on time.
4. Credit card monitoring and credit card insurance. There is no need to purchase credit card insurance because there are so many stipulations when signing up for the insurance that it is to your advantage live below your means to pay down debt.
5. Some credit card term change as the wind blows and makes it difficult for consumers to keep up with the changes.
6. The credit card agreement or disclosure is created using fine print to make it difficult for most consumers to read and those who try to read it get frustrated because of the fine print. However, this document is very important and should be read because it tells you all of the restrictions and guidelines for using the credit card.
7. The payment address or due date may change as a way to confuse consumers so their payment arrives late and they get charged a late fee.
The CARD Act of 2009 will eliminate many of these creditor tricks but the credit card companies will still find ways to work around the law to make money. It is best that you read everything you receive from your credit card company, ask questions and know your rights as a consumer. You can find information on the ftc.gov/credit site.
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