Credit Card Traps- What Every Debtor Must Know

The credit card companies are smart. Very smart. Many of them are constantly on the hunt to drown as many people as they can, for life. And they often succeed. They use credit card traps that would put a frown on the devil himself! It Starts Out Innocent...rnO.K. You receive an offer in the mail that says "you have been pre-approved for a $1,000 credit limit!". You sign up. You don't even bother to read the fine print, you simply glance at it. After all, you need to be an attorney or a finance whiz to understand it. "You're Already Fighting A Losing Battle"rnWhat you probably didn't realize is that the method of computing interest is totally different than how a mortgage or auto loan is calculated. The interest for home or auto loans is charged only on the principle amount that you borrow. On the other hand, credit card companies charge interest on the amount that you borrow plus additional interest on previously paid interest. They bombard you with interest! But that's only the first credit card trap. This is the main reason that if you are making minimum payments, your credit card balances are reduced only a few dollars each month. Sometimes the balance is higher than last month. "Creditors Meditate In Dark Rooms All Day Thinking Of New Fees To Charge Their Customers"rnWell, it seems that way. They have creative names for the many different types of fees they charge. Anyways, as time passes, you start to notice that you have been charged for fees that you didn't even know existed-activation fee, credit protection fee, transfer fee, over-the-limit fee, non-usage fee, credit offer refusal fee, etc. After several months you notice that your balance hasn't decreased much. It may still be the same, or worse, higher than it was the previous month. It Gets Worse...rnThe fact is, an increasingly number of creditors are trying to squeeze out as much money as possible from you. For instance, several years ago fees were an average of $15. Now, they range from $20-$90! Credit card companies have powerful lobbyists on their side. They pay millions every year so that the laws are favored on their side. However, when there is a public outcry that the credit card companies are getting too greedy, the government steps in and creates new legislation. Unfortunately, government intervention often fails. The creditors simply find new credit card traps to compensate for their loss, for instance, raising interest rates, and adding new fees. And that's not all. Another scam creditors employ is trapping their customers into making late payments. They accomplish this by changing the payment due date without notifying them. Or, they will hold your payment for a few days without posting it so they can charge a hefty late fee. Last, the vast majority of credit card companies are now raising their rates as much as 29.99%. Sometimes they do this for no apparent reason. Sometimes they raise the rate because a debtor was late on a payment, and not necessarily late with the creditor that raised the rate. The late payment could have been with creditor "B", "C", or "D"! "Now You Need A Rope To Climb Out Of The Hole That You Dug Yourself In"rnFast forward the clock. Today, let's assume that you owe $30,000 to your creditors. Let's further assume that your average interest rate is 18% and your minimum payment is $750. In order to pay-off this amount, it would take about 33 years! See creditcards.com And that's if you never have another late payment, stop charging additional debt, or the creditors never raise your interest rates or stop adding fees. But that's highly unlikely to happen. The unwritten motto of the credit card companies is: "let's drown every American we can into debt for the rest of their lives!" But You Have The Power To Fight BackrnThe only way to get the creditors to stop planting credit card traps is when the debtors had enough and put pressure on the government to initiate new legislation. The choice is ours...