If you are among the few who pay off your credit card balances each month, congratulations! Unfortunately, most of us are caught up in The Cycle of Debt. So how much are our credit cards actually costing us?
Pull out your credit card statements and look at the portion that breaks down how much you owe, how much your last payment was, how much your new purchases are, and how much you paid in interest. Where does that leave your ending balance? How much was your beginning balance? Are you increasing your debt or decreasing it?
Just looking at the interest charges on the bottom of your statement may not be all that you are paying. There are many other hidden fees that can go unnoticed if you don�t pay careful attention to the charges in the center of the statement. Many things will appear within this new purchases section that you may not have ever questioned. Credit card insurance, sometimes called card protection will appear here. If you sign up for a discount travel program or discount shopping program these could cost upwards of $100 and would appear on your statement once a year. If you are not paying attention, these could sneak by. The same with many subscription services, magazines, etc. many of these automatically renew to your credit card as do websites and other web services like internet service. Plus, you can sign up for all kinds of discount health programs and dental plans, etc. These value-added services can add up quickly and not everyone gets the benefit out of what these services provide.
It�s a good habit to go through every charge on each of your credit card statements. As a customer service representative for a major credit card company, I can�t tell you how many people I spoke with who were being charged for things that they were not aware of. Subscription services, like dental plans, monthly internet services and other similar charges can go unnoticed for months. The familiar conversation, �I just noticed this charge. What is it? How long have I been charged this?�
The best defense is always knowledge. Read the details of the $3.00 check you received in the mail. Read about the free magazines offer. Read about the statement insert on the free items. There are usually hidden charges in these offers. With the check, the terms are usually for an automatic enrollment in a program that costs about $89 on average, all done when you cash the check. The free magazines come with an automatic renewal. The neat free items you can order come with a per item shipping charge.
You could also be charged the wrong amount, or maybe even double billed for a purchase. These do happen on occasion and can usually be solved by contacting customer service.
What else may appear mixed in with your new purchases? Late fees and over the credit limit fees. What is the cost of sending in your payment a few days late? Once $10 or $15, now a single fee can be over $30! A call to your customer service center can often resolve these issues if you have a good payment history. Did you know that if the due date is not good for you that most credit card companies will gladly change it upon your request?
Aside from these actual costs of credit cards there are many underlying costs. What happens if your household loses an income? Credit cards produce us with another bill to pay. Once used only for emergencies now used for everyday items, credit cards can send us down a bad financial path. How much is the item you bought on sale actually costing you by the time you pay it off? How much have the holiday gifts cost you in interest charges over the year?
Paying interest to others is not going to get you ahead in the game of life. In can be really easy to find yourself sinking amidst credit card debt. But what happens if you are using credit cards to help pay other bills? Transferring balances or taking cash advances to pay other bills is not a good situation. It can most definitely get you out of a short term bind, but for the long term, the house of cards you built on credit card statements will crumble. I�m in debt what do I do? Options are? along with many other free articles found on this website can provide insight on how to better your situation.
Review your statements, and know exactly what credit cards are costing you. Be in charge of your credit cards, don�t let them be in charge of you.
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