Posts tagged ‘credit card debt’

August 11th, 2010

Ask The Expert June 10-11

I offer readers answers to write in questions at CardRatings.com Here are just a few. examples that I will share with you from time to time.

Question: Which has a lower APR on a personal credit card, Visa or MasterCard ?

Answer: There is no way to answer this question as each card will have its own determination based upon such issues as purpose of card. Is the card primarily as a student card, a secured card, a rewards card, etc? Then within each of those purposes the heaviest criteria will be the individuals credit worthiness. A poorer credit history applicant whether for Visa or MasterCard will have a much higher APR than the applicant with a good credit rating. If everything were identical, the APR would probably be the same. I would say rather than trying to determine which card has the lower APR between MasterCard and Visa, the more important issue is what is the purpose of the card and then which card offers the best terms.

Question: Is there any way to know how large of a credit line you will be offered when you apply for a credit card?

Answer: Your credit line offering is dependent on numerous factors. To begin with each type card will usually have preset highs and lows. This is determined by the lender when the card package is set up. You can sometimes determine this from the marketing material available. Then within those limits, your credit limit will be determined by your credit worthiness and past credit history. The exception is a secured card limit is determined by how much you have as collateral against the card in your savings account. One of the best resources to determine what your credit limit might be is to ask the approving authority and they will offer you at least some general guidelines. But short of these guidelines the answer to your question is no, not really.

Question: How do I check the balance on my credit cards?

Answer: There are a number of ways to check your balance. The most certain way is to keep your receipts and keep a running tally. You should do this anyway to verify entries when your credit card statement is sent to you. Check each receipt not only to insure you actually made the purchase but that the total is correct. You can also check your balance by looking at your statement when it arrives. But if you need your balance sooner there is usually an 800 number in association with your card that you can call and get an automated teller response or a live counselor. Often times you can also set up an account to view your account online. But beware of the fact that any statement online or over the phone might not include your most recent transaction. Therefore keeping receipt is always the safest bet.

Question: How long is the grace period for a discover student card?

Answer: The grace period for any card is dependent on your contract. Some cards have 25 days and some 30. Some cards even have 0 days grace period. For example if your contract has a statement such as the following in association with “Grace period” you should note what is not said. “We will not charge you periodic finance charges on new purchases, or any portion of a new purchase, paid by the due date on your current billing statement if you paid your entire balance on your previous billing statement in full by the due date on that statement.” It says nothing about extended grace period and therefore you can assume there is none. If you no longer have your contract or cannot find it, you should call your card holder to be certain.

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The truth is the average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for years and you can see how it is done yourself by receiving the free Debt Freedom Mini-Course via email.

You might also want to know that that eliminating all debt is like getting a 40% Tax-free Salary Increase.  If you don’t believe me, read the blog about it.

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April 9th, 2010

Banking Cards Are Just Like Drugs

Banking cards or credit cards are just like drugs. There is no better analogy. They offer short-term pleasure and long-term pain. Banking cards give the illusion of having more money than you actually do. Then you live with less because each month a portion of your income is siphoned away paying past banking card debt debt.

A Building Block of Life

Did you know the average American family carries about $8000 in credit card debt and has on an average 6 cards? Furthermore, if no additional purchases were made and the average family made only minimum payment, it would take 22 years to pay off the average banking card debt.  Credit card debt is counted in the billions of dollars.

Credit is positioned like a platform or building block of life. “And for everything else there is xxxxxx banking card.” It is almost considered inconsequential to use your card…. After all the purchase is far more important than the debt incurred… ludicrous.

Therefore we use our banking card, and use it, and use it until we literally cannot survive without it. Some folks would be shocked to learn that not carrying a banking  card is actually not against the law?

Smiling Creditors Are Not Your Friend

Creditors are not doing any favors by extending credit no matter how friendly their facade. Their purpose is getting you hooked and draining off your future wealth. This is future money that you can’t even guarantee is going to be there. Why? Can you guarantee you will have your job tomorrow, next week, next year, in 10 years? But we promise it away just the same.

Creditors are not giving us anything. They’re not adding one penny into our life. Consider this. Creditors do not make a penny until we go into debt.

Therefore, do you really think they hope to contribute to your future wealth or do you think they just might prefer that you are horribly irresponsible and charge everything you see? They want you in debt and the deeper the better.

And just as you think you are smart enough to climb out of your credit entanglement, your “friendly” credit card executives are figuring more and better ways to offer conveniences to entice you to use your card even more. For example:

  • Have you noticed how many fast food places now take credit cards? Now there is a conflict in ideologies, “fast food” and “credit card”… hhhmmmm.
  • Did you know taxicabs and parking lots now take banking cards? I sure hope it’s a deductible expense. The compound interest it generates, of course, is not.
  • Movie theaters now report 25% of payment is by credit card.
  • The other day I saw a young man at a grocery store paying for 5 candy bars with a credit card. Talk about short-term pleasure and long-term pain. That has got to be a prizewinner.
  • Many mortuaries now take banking cards. Why does that sound strange and why is it a fitting last example?

The fact is, credit card executives now know that most credit worthy people already have 2+ cards. But they still send out 2.5 billion solicitations annually and the average household receives nearly 24 banking card applications per year. Still, finding innovative ways to increase credit debt is their primary solution to increase profit. As one bank card executive reported, “We will break down the barriers of debt.” If that doesn’t sound like drug dealing I don’t know what does.

What Will We Teach Our Children?

Until we learn to shut off the wealth sucking valves, we will continue to drown in a sea of debt. Until we stop creating new debt with the convenience of a credit card, we will continue the strangle hold of our creditors. Until we start operating on a cash basis, we are doomed to a life of debt. [See Debt Assistance to learn more of getting out of debt in an average 7.5 years with the money you currently earn.]

Our future and the future of our family is at stake. And until we make a decision in favor of ourselves instead of the credit card industry, we will foolishly squander our future by living in a world of illusion and paying its price— just like an addict

I offer one final note. Obviously I am opposed to banking cards. But I also recognize that we live in a world of plastic. In and of itself, there is nothing wrong with a credit card. It is an innocent piece of plastic. It is what we do with it that makes a difference. If an individual finds they cannot control their use of the card, the card must be completely eliminated. It is as simple as that.

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