Credit-Card Hazards and How to Avoid Them

Here's a list of some of the hazards of credit cards and how to avoid them. The key points:

• The big secret of the modern credit-card industry is that issuers of plastic are in no hurry to see you pay off your debt. In fact, they make a lot more money if you make only the minimum monthly payment.
• Issuers of plastic don't really mind it when you're late making a payment because there's big money in collecting late fees.
• Right now, the average rate on credit-card debt in America is around 13 percent. But that's just the average. Rates range as high as 40 percent annually.
• Most credit cards charge annual fees ranging from $35 to $100. If you're like the average family and have seven or more cards, this can really add up.

The article then goes on to offer solutions to each of these problems. However, here are my thoughts on a better solution:

1. Use a credit card that has no annual fee and gives you cash back.

2. Only charge what's in your budget and pay it off every month.

3. Work on paying off all your debt so you don't have to deal with balance transfer offers.

FMF recommends Emigrant Direct.

Comments

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When getting a credit card you should always remember that the main goal of the card issuer is not to allow you to make extra money but to make money on you. That is why you should be aware of such tricks as annual fees, late fees or expiring date. Of course, you have better chances of getting a good credit deal if you have a good-to-excellent credit history. But the most important thing will always be carefully reading of the credit terms and comparing advantages and disadvantages of a particular credit program to those of others of the same kind.