The REAL Truth about Credit Cards
by Leeia Ladipoh on May 2nd, 2008
When credit cards were invented, they were touted as a way to help people get the things they needed that they otherwise wouldn’t have the money to pay for. The idea was to get a little jump on the purchase, but to then pay it off. It was supposed to be money for a ‘rainy day’.
Once millions of Americans began applying for and getting credit cards, the credit card companies began seeing dollar signs – and out of greed, destroyed something that was meant for good.
While the concept of having a credit card may be great, once you try to take advantage of a card with all the perks and extras, you may notice that it feels more like a ripoff than a good deal.
Fees
Many credit cards have lots of extra fees. You get charged for making a payment late. You get charged for going over your credit limit. You even get charged a fee for transferring money from your credit card to a bank account.
How can one little card have so many fees?
Some credit card companies claim they exist to help you rebuild your credit. Somehow they also think they are helping when you have pay $250 dollars just to get a bad credit credit card which has a very low credit line.
Interest
The Annual Percentage Rate (APR) is the next hidden evil in credit cards. If your credit score is high, then you get a low annual percentage rate. If you are like most Americans, your credit score is far from high – and you end up with an APR of 11 or 12 percent.
Unless you do the math, you may not realize just what that interest rate really means. Let’s say you go to the store and spend $100 dollars on a TV. The bill comes and you only send the minimum payment due.
Then next month, you’re charged interest on the balance. Once again, the credit card company will ask you to pay a minimum fee, and then charge you the interest again. At the rate they ask you to pay, you could be paying that $100 TV off for years.
Ignore the Ads
Many a financial advisor will advise that you spend with cash, to minimize the interest risks. The credit card companies are battling this. You may have seen a popular commercial on TV. Everyone is shopping and having a good time using their credit cards until someone pulls out cash to pay for their purchase.
All of a sudden, the music stops and life is pretty much on hold until they pull put their credit card and swipe it – and everyone goes back to having a good time.
What kind of picture is that sending to our young men and women getting out of school and going into the real world? The lesson they are learning is that you are not popular if you do not have a credit card.
This has turned us into a society where everyone is trying to have what everyone else – has even though they cannot afford it.