Tuesday, January 24, 2023
CREDIT CARD CRAZY
As the Fed has increased its rates, Credit Cards have generally followed suit, raising their interest rates.
Credit cards that were once reasonable, may now charge rates of 20% and more. If you have been late just once, your credit card rate can go to 30% and more. That means in about 3 years you pay as much interest as the amount of the original balance! 1! 2! 3! That is absurd.
If you pay your bill in full each month, there should be no interest on the amounts you charge during the next month. Be sure to check that!
Some credit cards are now offering loans on your available credit at a much lower rate than the usual, regular credit card interest. CHECK THE FINE PRINT! But it might make more sense to buy a $10,000 item, say, on an 8% loan, than on an 18% credit card, and it might be billed the same way !?!?!
Terms, rules, and rates on these loans and credit cards vary dramatically, and often change, so research before you take a new card (if you can figure it out from the fine print in the loan agreement), and check the interest disclosure on the monthly statement every month if you have a card already. It can help to have more than one card: use the card with the least current interest.
In some cases, your credit rating may improve if your average usage of available credit goes down. So, contrary to what you might expect, taking out a new credit card and spreading (the same level of) expenses over more cards, can sometimes improve your credit, by increasing your available credit while not using more of it.
Charges keep changing. Research and awareness are important to manage them! The ideas here are just a few suggestions of issues to consider.