Credit card companies are very good at doing one thing , keeping you in debt for as long as possible. But if you know what to watch out for and how to get around them you will save yourselves a lot of money and get out of debt faster.
Trick#1 Offering for you to transfer a balance to your card , when you already have a higher interest rate balances currently on the card. Why this is a big deal is because of the way the credit card companies handle payments. Now when you make a payment it pays off the lower interest balance first before the ones with higher interest rates. Now the only one that that benefits is the credit card, as they will continue to collect higher rates on the original balance until the lower rate balance is gone .
How would you get around this issue, only transfer a balance to a card with no balance or one that you can transfer the entire balance to and this issue will be avoided all together. Not that transfering for a better rate is a bad thing but if you do it improperly you will actually end up spending more in the end.
Trick#2 The funny thing is my credit card just tried this on me, they sent me a deal to make certain debts split off on the card to pay on those first until they are paid off, sounds good right.? Well again in hind sight it does the same thing as trick #1 . It takes you focus away from your actual balance and allows them to sock you with lots of interest on everything else.
Trick#3 This is not actually a trick as it is a greedy measure to ensure they stay profitable. Never ever ever make your payment even a day late. they will sock you with the most interest that they can legally causing you to not be able to make an efficient payment. There are ways to limit the amount of interest you pay on your credit cards, this is the practice I show all my clients to allow them to save money regardless of interest rates.
Trick# 4 Credit card companies will periodically offer you the ability to go a month without making a payment , do not fall for this technique and please make sure to go ahead and make your payment. This gives them another 30 days of interest on your full amount owed.. so bottom line don’t do it.
These are very common things credit cards will do to keep you in debt for as long as possible, but you can fight back by planning things correctly. Planning a proper debt elimination , debt consolidation, debt reduction plan will go a long way in reducing your debt fast and increasing your credit.
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