If you are like most Americans, you probably have at least one (however, more than likely more) credit cards in your purse or wallet. Americans as a whole are reaching skyrocketing credit card debt levels, and credit card companies aren’t exactly shedding tears over the issue.
For years, credit card companies have had more than a few tricks hidden up their sleeves when it comes to fees and interest rates attached to their cards. With every new credit card issued, came practically a whole packet of fine print (most of which was most likely never read by the new card holders). Countless Americans have found that over the years, what once may have started out as a relatively small, reasonable interest rate, has evolved into a vicious, difficult to follow cycle of different interest rates along fees continuously showing up on their monthly statements.
For example, many people did not realize until after they had pulled cash from an existing credit card, that the interest rate would go from the original lower rate,to a much higher rate; sometimes even doubling or tripling the original rate on the cash pulled. As a result,they would have one interest rate for purchases, and another rate for cash advances that was much higher. Many people in this situation, would continue to pay just the minimum payment, not realizing that the money they would be paying would not be going towards paying off their much higher interest rate, but instead the money would go towards paying off the lower interest rates first, letting the much higher rates build up.
The Credit Card Reform Act:
This Act was passed this past may and became effective in February 2010. With the new credit card reform act, their were many changes that essentially made our credit card statements much easier to understand and put more limits on credit card companies. (Previous blogs on our site discussed many of these changes in greater detail; Credit Card Act Blog)
However, consumers still need to be cautious. Be aware that with most major credit cards, you will still need to make payments OVER the minimum payment amount due for any money to go towards paying off your higher interest portions. The new act mandates that “lenders apply any payment above the minimum toward the highest interest bearing balance”…with the keyword in there being “above”. Some people are calling this a loop hole for the credit card companies.
Bottom line, we need to be extra cautious and read all of the fine print when engaging in any financial decision.
Are you tired of dealing with credit card companies? Check out the Netspend Prepaid Debit cards offered by Check City. Forget about high interest rates and hidden fees. And no more worrying about overdraft fees from your bank when you over use your debit card. With the Netspend Prepaid debit card, you can load up a certain amount, and use it until the money is gone, after that, in order to continue using the card, you must reload money on to your card again. It is a great way to learn to budget yourself and to work towards getting yourself out of debt all together. Best of all, you don’t need to have a checking account or a credit check to get the card!
