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| Beware Paying the Credit Card Minimum Payment |
| by: Johann Erickson |
| Need a new iPod? The computer store running a special this week? Want that new outfit? Got to have that CD? Before you reach for your credit card and make that impulse buy, think for a moment. The payments won’t be much? Think again. Paying only the minimum payments on your credit cards can cost you. “But,” you say, “my balance is low, and with this purchase, it will only be $1,000. I can pay that off in no time!” Well, if you enter the Twilight Zone and never again use the card for any purchases, are never late, and go over your credit limit, you can pay off the card by making minimum payments. It’ll only take a little under five years! Just fifty-eight short months of your life, costing you $154.48 in interest charges, that is, if your card rate is only six percent. But what about higher rates? Generally, the higher the interest rate, the more you pay and the longer it takes to pay off the card. But what about higher rates? Generally, the higher the interest rate, the more you pay and the longer it takes to pay off the card. Everybody knows that, you argue. Everybody uses credit. Well, true, nearly everybody uses credit, because it seems like we’re not really spending our money, but someone else’s. Plastic is deceptive. Most folks do make impulse buys, rationalizing that they can pay off their card balance in a short time. But life happens to the best repayment plans. Think you’ll never get sick, fired, laid off or downsized? Do you drive a forever car that will never need major repairs? Think again. And when these things happen, the minimum payment beckons like a shining solution. But is it? Hardly. Let’s say that you had several cards, all having a $1,000 balance at different interest rates. Note the long repayment times, assuming, unrealistically, that you never make another purchase with any of these again. Check the chart for repayment times and interest rates. RateMonthsYearsInterest 9%635.8$258.46 12%69 5.75$389.16 15% 796.58$579.48 18%998.25$987.05 24%42635.50$7,521.85 By the time you zero out a card with 18% interest, the going rate today, you’ve added more than 50% of the total you spent on the purchase in interest charges during the eight plus years it took to repay. So what, you got a low rate? Perhaps you were offered a low rate of six or nine percent during a card issuer’s promotional period. Naturally you used the card to charge items until you reached your set credit limit. After a specified period, maybe six months, that promotional rate will end and your interest rate will increase to 12% or more. And heaven help you if you incur any late charges. This year almost all credit card companies have raised their late fees to $35 from $29 in 2004. But that’s not all they will do. If you’re late on any card that you use, expect to see that rate increase dramatically. Up to 24% or higher depending upon the area in which you live. Unbelievable? It can happen faster than you can blink. Unsecured cards are bad enough. Secured cards targeting those with credit problems are worse, usually starting at 24%! Add late, overlimit and credit line increase fees, and you can see what a masterful trap credit can be. All of the fees add up quickly and interest is charged on everything. So before you reach for your card and make that impulse buy, think again. Pay cash. Cash makes you live within your means. Buy when stuff is on sale. Avoid the minimums. If you use credit, pay amounts above the minimum to shorten your repayment time and lower your costs. For more credit repair tips, please visit us at Helpful Home Ideas. About the Author Johann Erickson is the owner of Online Discount Mart and TV Products 4 Less. He is also a contributing writer for sites such as Helpful Home Ideas. Please include an active link to our site if you'd like to reprint this article. |
| 01/05/2009 07:08 PM |
| Credit Card Companies Lend Helping Hand To Customers (WTAE-TV Pittsburgh) |
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With many Americans drowning in debt, credit card companies are suddenly willing to throw some of them a life preserver.
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| 01/05/2009 09:37 PM |
| Woman on credit card theft charge (Illawarra Mercury) |
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A Barrack Heights woman will face court today on a series of offences, including theft of a credit card and driver's licence.
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| 01/05/2009 04:16 PM |
| Conway police looking for man in connection with stolen credit card (The Myrtle Beach Sun News) |
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The Conway Police Department is looking for the man in the attached photo in connection with using a stolen credit card at various locations within the city limits of Conway, according to a news release from Catina Hipp, the police department's public information officer.
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| 01/05/2009 11:54 AM |
| How to Pay Off Credit Card Debt (ABC 2 Baltimore) |
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It's a new year and time to pay off your credit card debt. We've scoured the web to find tips for the entire week.
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| 01/05/2009 01:07 PM |
| Woman charged with using mom's credit card to buy two iPods (The Express-Times) |
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A 36-year-old Stewartsville woman is charged with using her mother's credit card to buy two iPods at the Wal-Mart in Pohatcong Township. The charges against Tara G. May, of the 300 block of Jessamine Lane, include forgery and theft. She...
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| 01/05/2009 06:27 AM |
| HLB TARGETS 30,000 MEMBERS FOR NEW CREDIT CARD (Bernama via Yahoo! Malaysia News) |
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KUALA LUMPUR, Jan 5 (Bernama) -- Hong Leong Bank aims to attract over 30,000 members for its newly launched HLB Platinum Business credit card within a year, said its chief operating officer for personal financial services, Moey Tan.
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| 01/05/2009 06:42 PM |
| Genesis Financial Solutions Converts Credit Card Portfolio in Record Time (Business Wire via Yahoo! Finance) |
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BEAVERTON, Ore.----Genesis Financial Solutions, an originator and manager of credit-sensitive unsecured consumer receivables, has successfully converted and assumed management of more than 70,000 performing and nonperforming credit card accounts.
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| 01/05/2009 09:19 AM |
| Credit card theft suspect turns up in jail (Tahoe Daily Tribune) |
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SOUTH LAKE TAHOE - A suspect in connection with racking up hundreds of dollars in charges with a stolen credit card was discovered in jail after his arrest on suspicion of an unrelated probation violation.
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| 01/05/2009 06:34 AM |
| Credit Card Crackdown (The Gourmet Retailer) |
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Credit card issuers striving for increased profitability are taking action by closing inactive accounts, lowering credit limits and raising rates and fees, reports Mintel Comperemedia. What's your credit card issuer up to?
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| 01/05/2009 12:21 AM |
| Business groups praise, pan new credit card rules (BizJournals) |
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Small-business groups are divided over rules prohibiting credit card practices that consumers consider abusive.
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