Posts Tagged ‘balance’

The Credit Card Stupor

Monday, March 2nd, 2009

Why do folks use their credit card and then not pay the bill off when the statement comes in?  They look at that minimum payment and maybe make a bit more than that amount.  Then when they finally hit the wall and cut up the credit card because they are so in debt they start using debit cards.  These are the cards that immediately remove the money from your checking account.  Most folks don’t know what’s wrong with this.  Why do folks think that is the only way out of their predicament?

Debit cards seem to work for some people.  I think that’s because they get immediate feedback on what they have.  I think we need to change the way credit cards work.

1.  We can no longer allow credit card companies to list a minimum payment amount unless they also state how long it will take to pay off the existing debt at that payment amount.  That should help people know that if they make such a low payment they are going negative and they will be paying for a very long time.

2.  There should be an easy way for consumers to find out the negative balance on their credit cards.  A text to the company should give them the amount owed for the last cycle and the current balance charged.  Then customers will know what they have already charged.  Come on, the Credit Card companies already know what the balance is as soon as that charge card box calls for the approval.  Then consumers would know their balance owed but will have the ability to keep their money in their accounts until the balance is due.  That is good money management.  Debit cards do not carry the charge card protections and so are more dangerous for illegal activity.

Credit cards when used properly are a smart use of credit and are valuable in emergency situations.  Read more about the 4 steps to Financial Freedom.