CREDIT CARDS
You may get a shock when the dreaded statement arrives and the balance is far more than you expected. At least there is one good thing about this - you receive an invaluable lesson in the way small amounts added together can soon become a large sum.
If you are unsure about how much you have charged up to date, don't forget that you can find out immediately by phoning the credit card issuer. That may give you time to put money aside to cover the debt.
The trouble with credit cards is that spending money with them feels different to using cash. To pull a $100 note out of your wallet and hand it across the counter can be a traumatic experience but book up a $100 dollar item on your credit card and you feel no pain. Well, not until the monthly statement arrives and you sit in shocked disbelief trying to figure out how so many relatively small payments could come to such a huge sum.
One person solved their propensity to impulse buying by keeping their credit card frozen in a block of ice. They knew that the desire to buy something usually went away in a few hours, which was the time it took to defrost the card. Other people have chosen a card with a low limit and then paid only the minimum amount back each month. This restricted their spending as they never had much credit available.
Be aware that the fine print can catch you. For example, your credit card statement will have a due date on it, which is the last date for payment before you incur high interest charges. It is easy to overlook paying by the due date over the holiday period when you get out of your routine, but you may feel it won't matter if you are a day or two late because the interest for that period won't amount to much.
Think again; on most credit cards you are charged interest from the date the statement is issued, not the due date. As the issue date may be three weeks before the due date, it is obvious that being just a few days late in paying your credit card account, could cost you nearly a month's interest.
Finally, don't fall for the offer that "no minimum payment is required' this month. All the bank is doing is adding the interest to what you already owe. That means you are paying interest on interest, and at the staggering rate of at least 15%!
|
