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Credit Card Interest/ Service Rates - Making a Killing
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by SHIVAPRASAD | October 30, 2009 at 11:07 pm
116 views | 14 Recommendations | 4 comments
Shopping for goods and services with credit cards give a false notion of eating the cake and paying later. As we routinely use credit cards for purchases, we find it difficult to clear the entire dues shown in the monthly billing and resort to paying 'minimum due' amount falsely feeling that we are making regular payments. What we need to know is that the Credit Card Companies across the globe charge astounding interest rates up to 30% on the carried forward balances. The minimum amount due shown in the statement will barely cover the finance and other charges and you end up paying life long for the credits you enjoyed years back.
As depositors banks hardly offer 5% interest while charge and fleece up to or even beyond 30% interest on the utilization.
If you want to be out of life time debt trap, please please never use your Credit Card. Best thing is surrender the card and use only Debit Card and try to keep your spending within your limits to stop worrying and spending sleepless nights.
It is for the Governments too to act and protect the consumers by fixing the maximum interest and service charges for the credit card holders keeping in view a fair balance between the cost of funds for the banks and the lending of funds to credit card holders.I am sure that not more than 10% interest rate on the credit card out standings adequately cover the cost of funds for the Credit Card managers. There is need to curb the extent of greed that runs among the Card managers.
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Recommendations (14)
Amy Judd
Vancouver, Canada
jefhow22
Wilmington, Massachusetts, United States
Hugh Askew
Omaha, Nebraska, United States
Most RecentMost Recommended Comments (4)
at 00:21 on October 31st, 2009
Nice viewpoint. Good advice, too. got mine paid off a year and ago. Haven't used them since. (except online purchases - which get paid off immediatly)
I do take exception to this line:
"There is need to curb the extent of greed that runs among the Card managers."
The banks that lend you money by way of your credit card, really do need to make a profit on that transaction, else there would be no reason for them to risk their money for your benefit.
They have hundred of millions of cards out there. They have to factor in the risks of loaning billions of dollars to folks who may simply decide not to pay anything back. The banks are also on the hook for most of the charges made on stolen credit cards.
Have they been irresponsible by giving cards (thus credit) to people that shouldn't have them? Do otherwise responsible people use that credit unwisely? Certainly.
Both groups have made huge mistakes when it comes to credit cards. It appears that the credit card market has followed the housing market (or set the example for it).
As a result, and because of the new laws passed, the lenders are tightening the screws. People will use their cards much less, and pay more attention to what is going on. It will also reduce the exposure, and the amount, that the banks have to consumer debt.
I got a notice last week from a major bank regarding a card i own. I haven't used the card in over a year, have a $0.00 balance, yet my rate was raised to 19.99%. Guess i won't use that one again......ever.
at 00:37 on October 31st, 2009
My point is that when the banks and financial institutions give us an annual interest of not more than 8% in case of India (In the US the return on savings will be much lower), the credit card companies are charging as high as 3% per month on the unpaid credit card out standings which is nothing but greed. Yes Credit card companies need returns but there should not be such a mismatch between their cost of funds and their lending rates to card holders. This is my only point.
at 04:33 on October 31st, 2009
...my credit score is among the top 15%...yet I got a notice from BoA that my rate in going from a fixed to a variable...and Citi has raised my interest rate from 9.9% to 29.99% because they are changing their structure..I guess they are!!...I posted on this same issue a couple of weeks ago...I haven't used the cards in a very long time...still paying down my debt but it has NOTHING to do with GREED!
at 18:21 on October 31st, 2009
Agreed on the greed, Jefhow. I got mine paid off 1 1/2 years ago. No one forced me to use them, but i did. Doesn't take long to figure out how much they are costing. Done with them now.
Hope you get to that point. Any chance of taking out a personal loan to cover them (i know you are unemployed)? If you could, would save beaucoup bucks.