Do you think only marriage can breed hardship? Try the credit card. Both have something in common; they can cause frustration, overwhelming stress, and grief. There are, however, advantages as well as disadvantages to each. Let’s address the credit card.
Enjoy now, Pay later
Take a trip to Hawaii on your favorite airline’s credit card. Bask in the sun and surf giant waves; all this is yours on the credit card, but you might be confronted with a larger than expected bill a month later.
The Rewards of Giving
Credit cards are like having a wealthy friend-always there to lend you money if you’re lucky, for special occasions such as gifts on birthdays or holidays for family and friends. There is no greater feeling than being able to give.
Good Credit Rating
Being responsible can go along way- a good credit rating justifies the purchase of a beautiful home, fine cars, and great vacations. By controlling your purchases and paying the required amount on time, you will always enjoy the blessing of good credit and a good name.
Receiving Monthly Statements
Monthly statements may clog up your mailbox, but they help you control expenditures and avoid late fees. Monthly statements also make you aware of low minimum payments and excessive expenditures, which are traps for ballooning debt. Thus, proper use of itemized statements could help keep you in good credit standing.
Credit Cards Provide Safety
They aren’t attached to your bank account where as the debit card is. Thieves can drain the last dollar out of your bank account with a debit card, while a credit card offers you safety, since it is detached from your bank balance. Credit card protection costs about 1% per month.
Enticing Credit Card Customers
Companies tease new borrowers with signup bonuses through lower introductory interest rates, reward points for gifts, or air travel enticements. These teasers lure borrowers like fish bait on a hook. Don’t let these enticements draw you in. These bonus points may serve you well for days or months, but built up debt can last for years often resulting in the nightmare of bankruptcy. So, control gratifications and make credit card payment your friend with better credit ratings.
Excessive late fees
At a Seniors discussion group, a resident complained about a $35.00 late fee on a $50.00 late payment. He thought it was exorbitant; it was. He didn’t realize the high fees are important deterrents to overdue payments. When he spoke with the credit card company, they made an exception and waived the charges this time.
Exorbitant Interest Rates
I recently received a $1500 credit card solicitation at 23.5-29.90% annual interest. However, I realized it was actually a $1050 loan, since $450.00 would go toward interest. Which is better, I thought, a $1,500 loan that I would have to pay back or a new $450.00 Dell computer with 4GB of RAM and a 500 GB storage that I would buy with the interest money? I can already envision better days of increased work performance with increased income from the purchase of the computer.
Credit Card Insurance Protection. Is it worth it?
Even though insurance benefits cover payments of involuntary unemployment, disability, or loss of life, the cost of this protection insurance is just too high. Credit card offers show these costs to be $.96 per $100.00 per month of the balance. That’s 1% per month of the loan or 12% annually.
A Shocking Surprise
If you took the maximum annual rate in the credit card solicitation of 29.9% and add it to the 12% per insurance costs, you face an approximate 42 % loan. Don’t forget the cash advance fees of 5-8%, the late fees and the return payment fees of $35.00 each, and other charges such as set up and maintenance fees of $75.00. Gulp! Do you see what I see? A staggering 50% onto the cost of the loan. Unless you’re Bill Gates or Warren Buffet, maybe we should think twice about taking out another loan.