A credit card is a loan from the bank! You can access this in the form of free money if you pay it back by the due date.
What happens if you do not pay it back on time?
This is where it becomes a loan. The whole balance does not become due, but rather interest on your unpaid balance begins to accrue and you are responsible to make at least the minimum payment.
At this point you are building credit card debt. Again I think most people understand this, but it is amazing how many millions of people find themselves in this predicament.
When you get a credit card with a credit limit this is not free money for ever. You are expected to pay it back and for some people this takes discipline that they do not have.
This creates a cycle that increases credit card debt in a number of ways.
1. Charge to the max. Some people continue to use their credit card until they max it out, that is to say they have reached their credit limit.
2. Take out a second credit card. Some credit card companies are their own worst enemy. They are like vultures seeking out potential customers.
This can be bad for you because it makes it easy to take out a second credit card and repeat the steps you just did on your first credit card.
If you do not get your spending habits under control, you can soon find yourself using credit from one card to make the payments on another card. Ultimately this ends up becoming a losing proposition and can lead to skipping payments, or even bankruptcy.
When you take out a credit card be sure you understand it is not free money and there are consequences to how you use it in the future.
Credit Card Balance Transfers Can Really Pay Off
With the current tough economic times people are striving to use as little amount of money as possible while saving in return. In this quest technology has kept up in terms of the financial institutions techniques to help their consumers.
This has led to more people using credit cards for shopping and other things. Credit through the use of plastic has become not only handy but it's also relatively inexpensive when you consider things such as monthly payments, and the ability to repay the total when you can.
What has happened because of this is a large number of credit card companies all fighting for your business. This is evidenced with things such as credit card balance transfers that do not end up costing you anything. The credit card company would prefer to sacrifice the fee for transferring the money in exchange for getting you as a customer and that balance in the future.
They will offer you a grace period to transfer your money as long as you are approved for their credit card. This is led to savvy customers learning ways to take advantage of these free balance transfers to improve their own financial situation.
A smart customer can take advantage of these the benefits and incentives and evade high interest rates while reducing the principal as well. A credit card balance transfer can save you a good sum of money. It is even possible to get interest-free money for as long as up to 18 months.
In addition, if you have various balance on different credit cards, transferring all your unpaid debt to that one card, will alleviate the stress of doing multiple payments monthly.
However, it calls for prudence while using this method, as many credit transfers have some hidden charges. For instance, the one-time charges on the balance transfer.
Moreover, you stand low chance of qualifying for this incentive if your credit score is fewer than 720. And, if you fail to pay in time, you risk forfeiting the zero percent period, which the interest rates can double up. Nonetheless, while adhering to all the terms and conditions of this program, it is definitely worth an effort, and any consumer should give it a try
This has led to more people using credit cards for shopping and other things. Credit through the use of plastic has become not only handy but it's also relatively inexpensive when you consider things such as monthly payments, and the ability to repay the total when you can.
What has happened because of this is a large number of credit card companies all fighting for your business. This is evidenced with things such as credit card balance transfers that do not end up costing you anything. The credit card company would prefer to sacrifice the fee for transferring the money in exchange for getting you as a customer and that balance in the future.
They will offer you a grace period to transfer your money as long as you are approved for their credit card. This is led to savvy customers learning ways to take advantage of these free balance transfers to improve their own financial situation.
A smart customer can take advantage of these the benefits and incentives and evade high interest rates while reducing the principal as well. A credit card balance transfer can save you a good sum of money. It is even possible to get interest-free money for as long as up to 18 months.
In addition, if you have various balance on different credit cards, transferring all your unpaid debt to that one card, will alleviate the stress of doing multiple payments monthly.
However, it calls for prudence while using this method, as many credit transfers have some hidden charges. For instance, the one-time charges on the balance transfer.
Moreover, you stand low chance of qualifying for this incentive if your credit score is fewer than 720. And, if you fail to pay in time, you risk forfeiting the zero percent period, which the interest rates can double up. Nonetheless, while adhering to all the terms and conditions of this program, it is definitely worth an effort, and any consumer should give it a try
