Consumer debt is currently spiralling higher by the week. As various credit card companies, consumer groups and government agencies try to dispense advice to consumers about how to manage their debt, it's important for people to understand that they have a large variety of options available to them when it comes to avoiding a debt-management crisis. One such option that some credit card owners can opt for is to change their credit card provider.
Changing your credit card provider is a sensible option to take if you're struggling to pay off your current credit balance. In fact, many credit card companies offer extremely low - sometimes zero percent - rates on balance transfers. So if you think you can pay off your existing debt within six months - and the zero per cent interest rate is valid for the same period of time - then changing your credit card provider is surely an obvious move to make.
However, it's important to research thoroughly before you take this step: once the initial low or zero per cent interest rate offer has passed, the rising monthly repayments can soon offset any benefit that the introductory interest rate may have given you. Most banks will warn you when the low interest period is over, but it's vital that you maintain your financial sense and keep track of changes in your interest rate.
However, there can also be disadvantages to changing your credit card provider: credit agencies monitor the number of credit cards individuals carry, and you can obtain reports from credit card issuers to gain advice on how to deal with them. However, you may be refused if a particular lender decides you have too much outstanding credit, so take as many precautions as you can when attempting to manage your credit card debt. Make sure that you check your bill for errors every time it arrives - and it's always best to pay the whole balance if you can. Paying the minimum amount (usually only 3 per cent of the total amount) can be a dangerous way to slide into debt.
If you decide to apply for another credit card, it's vital to find out exactly how much credit will be made available to you, and what your rate of interest will be. Credit card issuers occasionally offer deals as well, thereby offering you a lower rate of interest for a longer period of time if you stay with their services. Taking such action can often be more appropriate than taking out a personal loan, although it's important to keep in mind that different financial options should be chosen depending on your personal circumstances.
The message is clear, just use our powerful plastic card, and you can have it all, and have it now. Forget what you can really afford, just live the good life.
I saw a credit card commercial on television this past weekend that really started me thinking about the message they are broadcasting to America. The wrong message in my opinion. You have probably viewed the ad. A young couple's television finally dies out. The wife tells her husband that it is all right to go get that new TV set. The excited husband heads down to the electronics shop, credit card in hand. In the background, the music screams "I Want it All, and I Want it Now".
The premise for this ad is the new credit card feature where you can immediately get your available balance via an instant text message on your cell phone. So you can see just how much you can buy.
The underlying message here is "The heck with what you can actually afford. As long as you have some available credit balance, go ahead and use it."
The pharmaceutical companies can now advertise their products (i.e. drugs) to us, but they must clearly include the side effects. It is time we establish a similar regulation for the credit card industry. We must warn people of the side effects of using their card. This would not be new grounds for the financial industry. Commercials for investment companies have disclaimers regarding the risks of investing.
So what are the side effects of making that big purchase on a credit card? What does this commercial not tell us? They don't tell us that you still must be able to afford to pay for that big screen TV. They don't tell us that your big purchase will actually cost you more than the price on your receipt as you will be paying interest on that purchase. So your $1200 television will really cost you $2000 after you are done paying the interest.
They don't tell you that as your credit card balance jumps towards your credit limit, the bank will use that as an excuse to raise your card's interest rate, causing that big purchase to cost you even more.
This is the cycle for financial disaster that too many consumers have fallen into. This is exactly where the credit card companies want you; in the never ending cycle of debt.
Sure, we must take responsibility for our own actions. We must think before we pull out that plastic card. We must also however demand that the credit card advertisements stop sending a message of prosperity by simply using their cards. The bank should be required to give us full disclosure on the effects of using their credit cards.
When we use any other type of financing for any type of purchase, we are aware of exactly the terms and conditions of the purchase. With credit cards, we are clueless as to the actual cost of an item because the credit card companies change the rules and interest rates at their discretion. This needs to be disclosed in their advertisements. When people begin to realize that they really have no idea what that big purchase is really costing them, maybe then we will think twice before proceeding with that "I want it now" purchase.
Both Martin Mcallister & Jim Vrana are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Martin Mcallister has sinced written about articles on various topics from Festival Guide, Personal Finance and Insurance. many credit card companies offer extremely low - sometimes zero percent - rates on ---. Martin Mcallister's top article generates over 49500 views. to your Favourites.
Jim Vrana has sinced written about articles on various topics from Finances, Credit Counseling and Finances. Billed as The True Debt Advisor (), Jim Vrana's mission is to educate and empower people to overcome their financial challenges. The time-tested lega. Jim Vrana's top article generates over 27100 views. to your Favourites.