Trisha Williams never thought about a credit card. It all started two years ago when the mortgage term was over and she and her bank wanted to make more terms. She found that elsewhere they offered a much lower interest rate and thus began to reflect on moving to another financial institution. She also changed her banknote, and she was on the phone the next day and cut interest.
“I went to the bank to sign the amendment, but I was surprised to find that the interest rate would be in the agreed rate of 1.98%, but on the condition that I would be actively.
To credit the credit card in the required volume and number of transactions.
Each month had to execute at least one transaction for at least USD 1,500. If not, the bank is entitled to increase the interest rate on the mortgage by 0.2%. Finally, Mrs. Trisha was convinced. “Once a month’s grocery shopping, the money is paid right now,” she said. She got used to credit card shopping over time, but unfortunately it started to stop, because she sometimes forgot to settle the debt.
Although I set up the collection later, but I had its term on the 25th day of the month and I was paid on the 8th day of the month. This means that several times, especially at pre-Christmas time and after summer holidays, the money on my account did not expire. But she had a credit card, so paying another purchase or withdrawing cash was not a problem. Suddenly I was in debt and I couldn’t get to it again.
The withdrawal of money in the family budget was always missing and I was replacing it again by drawing on the cards.
And the debt grew, first two thousand, then five, later twelve thousand, plus interest around 600 and even USD for one period and for each incredible 99 USD. Finally, the debt climbed to twenty thousand. Mrs. Trisha borrowed from her parents, paid the whole amount and asked for the credit card to be canceled. Despite the warning, the interest rate on the mortgage will increase.
Incidentally, the monthly mortgage payment with the cancellation of the credit card increased from 11 567 USD to 11 733 USD, ie only 166 USD. “No card, no more payment and buy-outs just for yourself,” describes his experience with Mrs. Williams’s credit card.
The credit card is a gold mine for banks
Bank credit cards offer the assignment of a current account, sometimes also as a condition for a favorable interest rate on a mortgage loan. In terms of credit card learning, banks differ in many ways. However, they agree on one thing. Each credit card has a so-called grace period, usually around 40 to 45 days. During this period, the credit card owner may pay at merchants until the credit balance agreed.
The cardholder pays no interest on the borrowed money until the end of the agreed free period, but he has to pay the amount borrowed. And if he does not want to pay anything extra, he is fully in charge, ”explains Partners financial advisor Vladimir Weiss. And here’s the first stumbling block. Of the unpaid balance, the most overwhelming interest is paid on all consumer loans, usually in the amount of 15 to 25% of the debts. main number.
Many people cannot properly use financial products and cannot count how much they will pay for the services that the bank offers .
A classic example of when strict conditions need to be discouraged and 100% disciplined is the first use of credit cards. In the shops through their daily unsuccessful emergency pay not many people. The problem is, however, that the emergency funds are not being used as well.
Paradoxically, credit cards are more for creditworthy clients. Usually, only those who can afford to pay off the loan in the free period without any problems. Of course, it depends on the limit and the average monthly income, ie Weiss. According to him, the credit card for the ordinary consumer is rather a bit of annoyance from banks and few people can keep it at bay.
It is not an exception that the client accedes to his / her accreditation to save 150 USD a month, but in They are far away. A credit card is a good servant, a good helper when properly used. However, if used incorrectly, the wrong foam is wrong. Unfortunately, most people fall into permanent debt, ‘concludes Weiss and warns:’ Nobody has ever saved anything with a credit card. ‘