How To Avoid The Credit Card Debt Trap
Credit cards, for one thing, are not free cash. Funny enough, many customers think of them this way, and that- aha!- is how credit card companies build up money.
You will notice when you read through the fine print about credit cards that there are varying APRs, or annual percentage rates. This means the amount of interest you will pay on credit card charges if you do not pay your monthly balance in full. When have you go for shopping last time, think about it. Before buying anything make sure you can pay for those things from your monthly salary? Credit card companies bank on customers who are not attentive towards their shopping. You see, these companies bank on the chance that consumers will use their credit cards to buy more than they can actually afford at the time of purchase. When the bill comes and it can not be paid in full, the customer pays interest on this borrowed amount, and that interest accrues daily. This money goes right into the credit card company's bank account. With thousands of customers falling into this plight on a monthly basis, you can see where the companies get rich quick.
Credit card trap - how to avoid it? A little forethought and budget planning can help you prevent paying interest and still allow you to benefit from credit card perks.
Go for the mileage credit cards. Many airlines offer credit cards that earn you frequent flier miles based on the amount of dollars you spend. Enticing, right? Sure.
Just be careful to know how much you are able to spend in a month, and do not let yourself go over the top. Telephone and internet are two easy ways of checking your card balance. Always do shopping within your monthly limit and know when the closing date is for your monthly statement. That way you can take advantage of the bonus without digging yourself into a rut.
Speaking of the credit card rut, let us go back to that interest thing. Is you did not pay your interest fully in a month it will also accumulate interest? Take a look at this example. You have racked up $10 in interest on your credit cards in one month, based on a balance of $100. (Assuming a interest rate of 10% monthly.) The next month's interest accrues on the new balance of 110$ since you leave it unpaid. This means that the next month you have to pay additional $11! Total fee on your 100$ purchasing is 21$. Did you really find a bargain when you bought that jacket at 20% off? Perhaps not.
If you buy responsibly and keep track of your purchases, you can avoid credit card traps. Be a smart consumer, and credit cards can work in your favor.
You will notice when you read through the fine print about credit cards that there are varying APRs, or annual percentage rates. This means the amount of interest you will pay on credit card charges if you do not pay your monthly balance in full. When have you go for shopping last time, think about it. Before buying anything make sure you can pay for those things from your monthly salary? Credit card companies bank on customers who are not attentive towards their shopping. You see, these companies bank on the chance that consumers will use their credit cards to buy more than they can actually afford at the time of purchase. When the bill comes and it can not be paid in full, the customer pays interest on this borrowed amount, and that interest accrues daily. This money goes right into the credit card company's bank account. With thousands of customers falling into this plight on a monthly basis, you can see where the companies get rich quick.
Credit card trap - how to avoid it? A little forethought and budget planning can help you prevent paying interest and still allow you to benefit from credit card perks.
Go for the mileage credit cards. Many airlines offer credit cards that earn you frequent flier miles based on the amount of dollars you spend. Enticing, right? Sure.
Just be careful to know how much you are able to spend in a month, and do not let yourself go over the top. Telephone and internet are two easy ways of checking your card balance. Always do shopping within your monthly limit and know when the closing date is for your monthly statement. That way you can take advantage of the bonus without digging yourself into a rut.
Speaking of the credit card rut, let us go back to that interest thing. Is you did not pay your interest fully in a month it will also accumulate interest? Take a look at this example. You have racked up $10 in interest on your credit cards in one month, based on a balance of $100. (Assuming a interest rate of 10% monthly.) The next month's interest accrues on the new balance of 110$ since you leave it unpaid. This means that the next month you have to pay additional $11! Total fee on your 100$ purchasing is 21$. Did you really find a bargain when you bought that jacket at 20% off? Perhaps not.
If you buy responsibly and keep track of your purchases, you can avoid credit card traps. Be a smart consumer, and credit cards can work in your favor.
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