As convenient as credit cards are in this day and age, they are also one of the most easiest ways to fall into an ongoing cycle of never ending debt. Avoiding this type of debt should be the priority of anyone who needs or applies for a card to sort out a short term financial problem, be it to clear an existing loan, to repair their home or to pay off other debts.
Credit card companies especially in this dire economic situation many individuals find themselves in; are happy to offer their cards to many people, knowing that at the end of the day they will make their money back and then some.
Contrary to popular opinion, issuers like the banks do offer credit cards to people who can barely keep up with the payments, their ideal customer is someone who can pay, but is struggling to make those payments, so is susceptible to the never ending cycle of late payment fees, over limit fees, and usage fees that come as standard with the card.
In contrast someone who meets the minimum payment and pays beyond it every month, and even better clears the entire balance once the promotional period is up, is not the type of customer the issuers are looking for as they can hardly make as much profit as they can with someone who is struggling to keep up with their monthly payments.
Credit card companies are also quick to entice new business by offering an attractive promotional rate such as 0% APR (Annual Percentage Rate) for a period, usually 12 to 15 months. once the promotional period ends, the charges no longer make it worthwhile.
Some individuals have realised that if they cannot clear the balance once the promotional period of the credit card ends, they can apply for a new card with an even better or equal promotional period, and move the balance of the old card to the new card, however this can only work if the applicant has an excellent credit rating, nothing worse than finding out they have been rejected for said credit card, and now have to face clearing it.
The best way to avoid this type od debt, is to clear off the credit card in full once the promotional period is over, and avoid the multitude of charges that makes it one of the worst type of debts to have.
Posted in 
Tags: 