Debt Consolidation

An inviting trap created by our modern-day financial system, credit cards can be harmful to you financial health.

Using a credit card is not bad IF you have the money to pay off the balance each month

However, purchasing things with a credit card when 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.

During the past several years, debt consolidation experts have assisted many people to escape from the credit card trap with debt relief 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. They take counter measures to hook consumers back into the trap by offering 0% percent interest for some period of time.

Are they really giving you 0% interest? You are IF you can pay off the whole amount before the time frame is up. What the credit company are hoping is that you will NOT have the ability to pay it off.

What happens if you can’t pay? 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; 9.99% to 12.99% is fairly standard. But, many rates are variable, which really means it is the ‘attractive’ rate PLUS the ‘prime rate.’ The banks charge the prime rate to the credit company to lend them the money, and that gets passed on to you. This alone can add a whopping 6 - 9% on top of that seemlingly low interest rate.

Read further and you’ll see the rest of the trap. If you pay late or miss a payment, the credit company have the right to jack up the interest rate to well over 30%. PLUS, they are allowed to add an additional $25 - 39 late fee. If you owe a balance of $1,000, that is $52 - 66 a month in 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 make sure they continue to make interest money from you?

First is 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. Second, the credit companys are now using invitations to get money back from stores or earn airline miles for each dollar you spend.

Who pays for that? You do! The credit companies charge the stores for the cash they give you back, and then 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 said that it costs the airline industry $10 to fly you somewhere when you have charged enough to earn 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 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 business owners and families manage their income to achieve financial freedom. To learn more about the Money Management Software she created, watch the FREE 5-minute demo video on her website at www.MoneyMgmtSolutions.com

- Sandra Simmons

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