Credit Cards
Credit cards are quickly becoming a major problem for the American people. It is so easy to get into debt with a credit card, and anyone with a mailbox and a pulse can get one. Many Americans can't get out of debt and they run into credit problems; some even file for bankruptcy. The reason it is so easy to use a credit card is that when you use plastic instead of cash, you spend more because you don't emotionally register the pain. If you lay down $50 at lunch, you'll notice if it's a $50 bill. With a credit card, you don't even realize what you paid. The typical American carries five to seven credit cards with an average balance of $1,670 per card (People weekly). Banks are pushing the credit card to consumers in an effort to make money on the interest rates and various fees that can be charged. Since the early 1990's, banks have upped the credit limit on customer's cards by more than a third, and sent out another three billion offers in 1997 alone (Dollars and Sense). The new targets for these credit card companies are the low-income household families. While only 20% of poor families had a credit card in 1983, 40% did in 1995. Their balances were higher than ever, exceeding $1,30
5. If possible, you should try to make your goal amount higher than the minimum amount due. Even $10 extra a month will help. It is much better to put any extra money you have towards paying off a card with a 18% interest rate, then putting it in a bank that is only paying you 3% interest. The resulting daily balances are added to the billing cycle. The total is then divided by the number of days in the billing period to get the Average Daily Balance. Adjusted Balance is the best method for cardholders. Your balance is determined by subtracting payments or credits received during the current billing period from the balance at the end of the previous billing period. Purchases made during the current billing period are not included. The method gives you until the end of the billing cycle to pay a portion of your balance to avoid the interest charges on that amount. Previous Balance, the amount you owned at the end of the previous billing period (Choosing and Using Credit Cards). At the end of each credit card statement you get in the mail there should be an explanation and breakdown of how your interest rate is calculated for that billing period. One billing method to watch out for is the Two-cycle method, where a credit card company may only charge you 10% interest, but it is calculated twice a month which would make it 20% interest. As more enticing offers are made to the American public and more competition for our credit card business lowers introductory interest rates and offers, credit card companies will think up better ways of getting money from us through higher late fees, and other charges. The consumer will really have to watch the fine print. If a person can control his spending habits and pay his credit card off each month, then having a credit card is not a dangerous habit. 2 http://www.ftc.gov/bcp/conline/pubs/credit/choose.htm, 0 on average in 1995, up $700 from 1983. 5. Nov-Dec 1998 v0 i220 p21 People Weekly, 3. Once you've determined the total current payment amount, take the card with the highest interest rate. If you have several cards that have the same high interest, then choose the card with the highest balance. This will be the card that gets paid off first. If a person has had a problem with a scam credit repair company, they can file a complaint with the FTC by contacting the Consumer Response Center by calling 202-382-4357. No one can legally remove true facts that have been filed on your credit report. In fact, negative reports are kept on your record for seven years before they drop off. But the law does allow you to look over your credit report and dispute anything that is inaccurate or incomplete, and there is no charge for this. 7. Above all else, do not use your credit cards anymore (Popeck). The hardest part for me was not using my credit cards anymore, I simple cut them up and throw them away. When I get paid each month I immediately write out checks and send them off to the credit card companies. A person does need one credit card if he is going on a trip, or just for convenience purposes. You can't get an airline ticket, rent a car, or reserve a hotel room without a credit card. So how do you know which one to get? Chances are that you've gotten your share of "pre-approved" credit cards with low introductory rates and other benefits. Most of these cards urge you to apply immediately before their offer expires, but your best bet is to shop around. When looking for a good
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Approximate Pages = 9 (250 words per page double spaced)
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