Articles

Credit cards are an alluring trap invented by our modern financial system.

Buying something using a credit card is not bad, IF you have the income to pay the credit card balance in full when the statement arrives.

But, purchasing things with a credit card when you don't actually have the money, is simply committing your future earnings to the credit company with the threat of a black mark on your credit rating. That is financial slavery.

Over the past few years, financial experts have helped many people to get out of the credit card trap with debt reduction programs. That alone speaks volumes about how serious the situation is. Helping people do this is not looked on favorably by the credit lenders; they lose all that profitable interest. The credit companies take counter measures to hook consumers back in with offers like 0% interest for extended periods of time.

Are you really getting 0% interest? Only if you can pay off the debt before the time frame is up. What the credit company are counting on is you NOT being able to pay it off.

If you can't pay, what happens then? Be sure to read the fine print carefully on their 'Terms and Conditions' service agreement. Most agreements have an attractive interest rate in large type; typically it is 9.99% to 12.99%. But, many rates are variable, meaning it is the 'attractive' rate PLUS the 'prime rate.' The prime rate is what the banks are charging the credit company which then gets charged to you. This alone can add a staggering 6 - 9% in interest on top of that seemlingly low interest rate.

Read further and you'll see the rest of the trap. If you miss a payment or are late, the credit company have the right to increase the interest rate to well over 30%. PLUS, they are allowed to add an additional $25 - 39 in fees. On a $1,000 balance, that equals $52 - 66 in monthly interest and fees you are required to pay before you ever get to pay the first dollar of the price of the item you charged.

What other tricks do the credit companies have in their tool kit to ensure they continue to make interest money from you?

That enticing 'minimum payment' they allow you to make which is mostly interest, and keeps you paying for whatever you bought for about 20 years. In addition, they are now inviting you to get money back from stores or earn airline miles for every dollar you spend.

Who do you think is paying for those credits? Right! You do! The credit companies charge the stores for the cash they give you back, and then raise their prices to cover the cost.

Credit card companies pay a tiny amount up front for each airline mile that they 'give' you for every $1 you spend. On January 1, 2007 in an NBC TV news interview, the president of a major airline said it only costs the airline company $10 to fly you somewhere when you have charged enough to earn 25,000 air miles to take a flight.

Who do you think really benefits if you spend enough on your credit card to earn a 'free' flight? It should be obvious that trap is disguised as a huge benefit to you.

Sandra Simmons, President of Money Management Solutions, has years of experience helping company owners and private individuals manage their income to achieve their financial golas. To learn more about the Money Management Software she created, visit her website and watch the FREE 5-minute demo video at www.MoneyMgmtSolutions.com