Understanding The Credit Card Trap
Author: Sandra Simmons

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, plus all your other bills.

But buying with a credit card because you don't actually have
the money, is simply committing your future earnings to the
credit company under the threat of a bad credit rating. That is
financial slavery.

Over the past few years, financial experts have helped a lot of
people to get out of the credit card trap with debt reduction
programs. Helping people do this is not looked on favorably by
the credit companies; they lose all that profitable interest.
They take counter measures to hook more people back in by
offering 0% percent interest for some period of time.

Are they really giving you 0% interest? Only if you can pay off
the debt before the time frame is up. What they are counting on
is you NOT having the ability to pay it off.

What happens if you can't pay? Have you ever read the fine
print on their "Terms and Conditions" agreement? Most agreements
have an attractive interest rate in large print; 9.99% to 12.99%
is typical. But, many rates are variable, meaning it is the
"attractive" rate PLUS the "prime rate" which is what the banks
are charging the credit company. This can add a whopping 6 – 9%
on top of that attractive interest rate.

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

What else do the credit card companies have in their arsenal of
weapons to make sure they make money from you?

First is that enticing "minimum payment" they offer which is
mostly interest, and keeps you paying for whatever you bought
for about 20 years. Second, they are now using invitations to
get cash back from retailers or earn airline miles for every
dollar you spend.

Who pays for that? You do. The credit companies charge the
stores for the cash they give you back, and the stores raise the
price you pay.

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 stated that it costs the airline industry $10 to
fly you somewhere when you have earned 25,000 air miles to take
a flight.

Who actually benefits financially if you charge up your credit
cards to earn a "free" flight? It does not take a genius to see
that trap dressed up to look like a big benefit to you.


About The Author: Sandra Simmons, President of Money Management
Solutions has years of experience helping business owners and
individuals manage their money to achieve financial freedom. To
learn more, Watch the FREE 5-minute demo video on her website
http://www.moneymgmtsolutions.com