What's the Interest Rate on That Card in Your Wallet?
June 3rd 2008 16:30
I just looked at the interest rates on my credit cards and wondered, “how often do most people do just that?” For me, I try to keep an eye on them to make sure everything looks good (and that there are no unexpected surprises courtesy of the credit card companies). I have one major credit card at 7.25%, that’s pretty darn good given this economy. Of course, then I looked at my store cards which are all well over 20%. Even my good credit history couldn’t get me a lower rate with these cards that seem to have a “one rate fits all” approach.
I don’t like to carry a balance on my credit cards, but especially not when one is charging me in the neighborhood of 20% . That’s good advice for anyone. Most people like to have store credit cards because that’s how you get the deals – you know what I mean – like 15% special shopping days or coupons for card holders anyway. Think about that though. You buy something with your store card and say spend $100. With your 15% off coupon, you saved $15. Great job, you super saver. At least that’s what you think. Unless you pay off that credit card right away, how much does it end up costing you in interest on that same store card? Depending on what kind of balance you carry each month, you could end up spending hundreds of dollars on just the interest each year. So how much did you really save with that coupon?
The same goes for those in store promos that say “Open a card with us today and save 20% on your first purchase.” Of course the stores love these deals, you spend money and think you are saving money when really you are racking up the interest and they make more money off you.
So my advice on credit cards is this, don’t carry a balance, but, if you do, watch out for how much you leave on those store cards or any other major credit card with a high interest rate. Yes, I know you hear this all of the time and may be thinking, “Gee, that’s easy to say if you aren’t already carrying high credit card balances.” If you are already in over your head with credit card debt, look for options to dig yourself out of that hole. The one thing you definitely don’t want to do at this point is add to the growing debt. If you already have credit card debt up to your eyeballs (or even if it’s waist deep), stop using the cards and looking closely at your monthly bills to figure out how much you can afford to pay towards those debts. It might also be a good idea to look closely at what your interest rate is on each of those credit cards. Getting out of those credit card debts is not going to be easy, but trust me, if you can spend smarter, you can make it happen.
I don’t like to carry a balance on my credit cards, but especially not when one is charging me in the neighborhood of 20% . That’s good advice for anyone. Most people like to have store credit cards because that’s how you get the deals – you know what I mean – like 15% special shopping days or coupons for card holders anyway. Think about that though. You buy something with your store card and say spend $100. With your 15% off coupon, you saved $15. Great job, you super saver. At least that’s what you think. Unless you pay off that credit card right away, how much does it end up costing you in interest on that same store card? Depending on what kind of balance you carry each month, you could end up spending hundreds of dollars on just the interest each year. So how much did you really save with that coupon?
The same goes for those in store promos that say “Open a card with us today and save 20% on your first purchase.” Of course the stores love these deals, you spend money and think you are saving money when really you are racking up the interest and they make more money off you.
So my advice on credit cards is this, don’t carry a balance, but, if you do, watch out for how much you leave on those store cards or any other major credit card with a high interest rate. Yes, I know you hear this all of the time and may be thinking, “Gee, that’s easy to say if you aren’t already carrying high credit card balances.” If you are already in over your head with credit card debt, look for options to dig yourself out of that hole. The one thing you definitely don’t want to do at this point is add to the growing debt. If you already have credit card debt up to your eyeballs (or even if it’s waist deep), stop using the cards and looking closely at your monthly bills to figure out how much you can afford to pay towards those debts. It might also be a good idea to look closely at what your interest rate is on each of those credit cards. Getting out of those credit card debts is not going to be easy, but trust me, if you can spend smarter, you can make it happen.
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