Credit Card Pitfalls

Since more and more Americans love their credit cards, they would consider it the main part of their life. They use it for buying any kind of goods and services.

Convenience is the major reason.

Some also like the idea of having every transaction documented. Monthly statements can help them with budgeting and financial planning.

But are Americans too familiar with their plastic to even try to understand how it works and whether it will affect their lives in any way?
Jody Farmer, vice president of marketing for creditcards.com said, “People did seem to know the interest rate, but beyond that they just seemed ambivalent.”

GfK Roper published a survey on basic aspects that consumers should know about their credit cards. Ninety percent of respondents said they believe their debt is as much as the national average.

More than 9 out of 10 Americans don’t even know how long it would take to pay off their credit card bill if only minimum payments were made.

Five Biggest Credit Card Traps according to Laura Rowley of Yahoo Finance are:

• Credit card companies can increase interest rates any time for any reason
• Ridiculous over-limit fees may be assessed monthly until the balance falls below the limit
• Late payers can find themselves charged with the two biggest unnecessary money-makers for credit card companies: late fees and penalty interest rates
• Unfair practice of charging the card balance with two-cycle billing interest
• One late payment on one credit card can affect the interest rate of other cards

All these seem to be a part of the lives of average Americans. They all wouldn’t matter if Americans can learn to get a hold of their finances, starting with eliminating their credit card debts and living on cash as often as possible.