Secret Number One
Credit card companies do not want you to pay off your balance!
Ever wonder why the credit card companie asks you for just a minimum payment? Why does that minimum payment requirement get smaller as the balance gets smaller? Ever owe just $12.00 and they only ask you for $5.00? If you would send in just the $5.00 you would get a usual minimum finance charge of 50 cents. The next month you would owe $7.50. If you sent in just $5.00 again, you would owe anothr 50 cent finance charge. Now you owe $3.00. Over 3 months you end up paying $13.00 on the $12.00 you put on the credit card. That end up being an interest rate over 1,000%.
How does the minimum payment affect large balances? The average credit card balance is $3,900. Pay just the minimum payment on a card with a 16.99% rate and it will take you almost 39 YEARS TO PAY THE CARD OFF (AND THAT IS IF YOU NEVER CHARGE ON IT AGAIN FOR THOSE 39 YEARS).
Secret Number Two
Credit cards HURT your credit score in many ways
Apply for a new card and your credit score goes down. Pay a credit card off and close the account, score goes down. Pay the credit card late, score goes down. Have a balance in excess of 50% of the credit card limit, you gessed it, score goes down. How can a credit card help your score. Keep a balance on the card, but for less than half of the limit. Yes, then you are paying them lots of interest to get a good credit score.
Secret number three
Credit card rates and limits
Credit card companies lure you to their card with a promotional rate. After the introductory period the rate rate increases significantly. Credit card companies raise the limits for you if you pay on time...sometimes without even asking. Why? Because they want you to use it!!! Get that balance as high as possible.
