Credit Card Debt Consolidation
Credit cards, the good the bad and the truly ugly aspects to using credit cards.
Credit Card Balance Transfers
This involves transferring an existing credit card balance to another card. The application to transfer the balance will involve normal credit application checks. Special offers relate to balance transfers. These occur from time to time and usually involve an interest free periods of 6, 9, 12 months and sometimes even longer. This may be all you need to be able to get your finances back into order. Refer to this page.
Good features of good credit cards
- Low or no annual fees, Low interest charges. Most cards charge about 20% interest. However there are some cards which charge rates around 13%. Special offers relate to balance transfers. See Details above
- Long interest free payment terms. When banks quote 55 days credit it is taken from the first day of the new period. It is usually 25 days after the month/period end to the date upon which the account is payable in full.
- Frequent Flyer points can be earned on purchases made on the credit cards.
- It is a good insurance policy against running out of or not having the cash when you urgently need to buy something.
- Some cards offer automatic travel insurance cover (but these normally have high annual fees.
Bad credit card features
- Very high interest rates. These can sometimes follow or be associated with an offer of a credit card in association with long term interest free loan for a major purchase. These rates can be in excess of 20% and up to 34%.
- Short interest free terms. Eg 10 days after the period/month end. Therefore only 40 days interest free terms.
- High annual fees and excessive late and over limit fees.
Ugly Aspects of using Credit Cards
Admittedly these aspects normally arise from the misuse of the credit card by a person or persons especially if there is more than one person using the same account. This occurs when a supplementary card is issued to say a spouse.
The main problem with over using credit cards has historically been the propensity of the banks to increase your credit limit as you spend more and use up more of the existing credit card limit.
The easy access to money via the credit card is a trap for some people who are unable or fail to see the consequences of running up big credit card balances without having the means to readily repay the debt within a short period of time. All they see is a minimum repayment amount which is relatively small and easy to repay in the initial stages but grows as the limits increase.
Unfortunately credit cards were designed to get you into debt that you are unable to payback each period. As a consequence the bank earns a constantly high return on their money and you will find it almost impossible to pay back once the limit has risen and you have a continuous balance on your account. Once you enter this phase and fall into the regular pattern of simply repaying the minimum amount payable each month you may eventually run up to your credit limits and your bank will not extend your limit any further. It is then when you may finally realise you have a real problem.
IF YOU ONLY REPAY THE MIMIMUM AMOUNT ON YOUR CREDIT CARD EACH MONTH THEN IN CAN TAKE BETWEEN 20 AND UP TO 70 YEARS TO PAY OFF YOUR CARD IN FULL.