A sad but true statement: more and more Americans are becoming financially dependent on credit cards for their day to day living expenses. Given the economy, rising interest rates, and fees, you can imagine where many of these folks will end up at in ten or fifteen years, if not, let me help…they will literally be up to their eyeballs in debt. What started as an account with a three hundred dollar credit limit is now a closed account, being assessed astronomical late and overlimit fees every month, with a balance of at least $600 or more. Keep in mind, that even though these people may have only purchased $200 on their card, they are still required to pay this outrageous balance due to the contract they agreed to when they filled out the original application.
It basically works like this- You have a job making good money, and decide you need a credit card for expenses, say booking a plane ticket, rental car, hotel, etc. You start to get offers in the mail for more cards, and not looking at the terms and fine print, you fill out those applications to, thinking it is no big deal, just another small monthly payment. You use the card up to the available credit limit, and make the minimum monthly payments on time each month. If you use the card for cash advances, keep in mind that you are going to pay a considerably higher interest rate than you would for regular purchases. Not all of a sudden, you have thousands of dollars in credit card debt, and the company you work for announces they are down-sizing, and that your job is one of the ones that will be getting the axe. You run off of your pension for a while, but that runs out and you still have been unable to find new employment. Now, you are having a hard time just making all those minimum payments, and keeping food on the table, and the creditors start calling. The debt continues to pile up, your credit score gets lower and lower, and the calls continue to come in, while the balances go up due to fees and default apr being charged on all of the cards. You find a new job, but it will take you years to dig out of this hole you have now put yourself in… and you look back, and ask yourself, could I have prevented all of this? Well, here are a few tips for the average consumer who relies on unknowingly gets into the credit card quagmire that may help get you out before it gets really bad.
First and foremost, on every application you receive in the mail, always pay special attention to the terms and conditions listed on the card. By law, this has to be enclosed somewhere within the application, but it may not necessarily be easy to spot. You want to really look at the area referring to annual fees, late fees, overlimit fees, finance charges, credit limit, and default interest rates. Unless you absolutely have to have a credit card and cannot do without one, try to never take a card that has an annual fee, and never one with an annual fee of more than $50 a year. You shouldn’t have to pay to have the card, especially if you have a decent credit history.
Almost all credit cards will charge late fees the day after your payment is due, most ranging from $29 to $35. If you pay everything by mail with money orders, it is a good idea to try to send your payment in the day you get your statement each month, that way you allow plenty of time for mail processing, payment posting, and will have a cushion in case the payment never makes it to the company. Always make certain that your full credit card account number is written on the money order, and that it is sent to the correct mailing address with the correct postage. Keep your money order receipt, because in the event that the company does not receive your payment, you can have it traced. If it comes back that the money order has not been cashed, the money order amount will usually be refunded to you within four to six weeks. The bad thing to this is that you will have to send in another payment to cover this one, probably before you get the money back for the lost money order. If this happens to you, it would probably be better for you to send your payment electronically by either Money Gram or Western Union Quick Collect, to ensure you don’t receive additional fees or a negative credit bureau reporting.
When mailing a check, it is still a good idea to give it plenty of time to post. The only difference with a check and money order is that if gets lost in the mail, you will not be out any money. You simply need to reissue a check. It is also easier to verify if a payment has been cashed or not simply by looking at your bank statement or calling your local branch, therefore eliminating the need to run a trace, as with money orders.
