What Banks-finance company wont say:

2009-08-22T11:00:00.000-07:00

Certainly, they are pure money-makings for the institutions issuing them to everyone. Besides the 8 to 18% or more in account-service fees from merchants who buy a credit-card franchise, It should be no surprise when you become(pre approved) for a new credit card. The financial institute stands to make an unbelievable 24% return on the credit card when approved to you. For many people, a wallet full of credit cards is a status symbol. They have Visa and Master Card, American Express, Diner's Club along with Department Store cards. This is pointless. Visa won't do anything Master Card won't do. American Express is taken just about anywhere as Diner's Card would, so as you can see having both is only helping the institution while penalizing yourself.

Avoiding the minimum payment trap is essential to everyone who own a credit card. Each month, lenders make it easy for you to pyramid your debt by offering to let you pay off only a small amount of your outstanding balance. While these smaller payments seem to allow you to hold onto more cash at hand each month, which only adds up to more major expense. Suppose you have a balance of $500 at the beginning of the month and the Credit Card company allows you to make a minimum payment on this amount is, say, 18% which is computed as 1.5% of the unpaid balance.(for argument or simplicity's sake,) we will assume that the interest charged are added after you make your payment. However, in practices many Credit Card companies compute interest on the average daily balance, which results in even higher charges.

Stay with me here, your minimum payment reduces the balance to $465. Adding the interest raises it to $471.98, and your new purchases take it to a new $571.98. If you make for instance another payment of $35, the next month's interest charges will be based on $536.98. For the second month, your interest will be $8.05 - nearly one forth of your minimum payment-part of which will be interest on interest! If you continue to charge more than you pay off, you will continue to accumulate interest on interest, as well as on your charges, and you will have virtually no chance of paying off your debt. You need to remember, as long as you are making the minimum payment regularly, the lender will encourage you to borrow more- even offering to raise the maximum line of credit if you get to close. (Another trap)

However, to reduce your credit coast and accumulate more money for investment purposes, try not to charge more than you can pay off in a month. If you have to charge a large amount, don't just make the minimum payment; pay off at list 40 or 50% of the outstanding balance. If you have to make a large purchase, look for the cheapest loan from a bank or finance company instead. Don't wait till it's to late and find yourself over your head in debt. Check your Credit Score - Fast, Free & Easy at CreditReport.com.

Credit Card Control

What Banks-finance company wont say: