Credit Cards
The rich rule over the poor and the borrower is the slave of the lender.
Proverbs 22:7
You have seen them on television, heard them on the radio and definitely had them stuffed in your mailbox. Advertisements from credit card companies for everything from flowers, diaries, chocolate and watches to life insurance, rewards programs, luxury hotels, vacations and weekend get aways. The perfect couple pictured enjoying themselves by a sunny pool or on a deserted sandy beach. Supplemented with special offers from automobile rental companies, airlines, hotels and fancy restaurants all packaged to make you dissatisfied with the way you are living and to make you feel that you deserve the good life because you are entitled to it. This great life style is yours for the asking because you have arrived. You have good credit!
Fact is you are entitled to nothing you have not worked for. You are being asked to give them your budgeted expenditure plus your discretionary expenditure but much more importantly to pledge your future income whether from earned or unearned sources.
Lose your job, get into financial difficulty due to poor health or fail to consistently pay at least the minimum required payment and these same corporations will introduce you to collection agents, lawyers, debt collection agencies, bad credit reports and all the while continue to send you offers of more plastic at ever increasing higher interest rates. You go from living the high life and being made to feel special to a person of low self-esteem and a life of misery.
Should you have a credit card? Absolutely but as a financial tool to do your bidding and as a mechanism to help you in tracking and controlling your spending. Control! You say control. Yes control because the credit card company does something most people are too lazy to do, they track all of your spending and document it. Some credit card companies provide you with a copy monthly free of charge if you pay off all of your balance each month. Even if your card has an annual fee is it not a reasonable price for this data collection and correlation? How much time and effort would it take you to come up with this accurate an itemized list? Use this information as an action item list to control your annual expenditure and to plan your credit purchases.
What about errors on credit charges? Do these happen? Yes of course they do but they are rare and almost all credit card companies will work with you to solve any legitimate mistake or erroneous charge. It is after all in their interest (literally) to keep you as a client.
Ask yourself why does the mortgage rate drop with the interest rate set by the Fed yet your credit card interest rate marches on. The answer is simple no legislation or government mechanism to make them. You will hear them say that a competitive market keeps interest rates low but this is not so. So how do you get the credit card companies to cut your rate? Simple tell them you are going to change credit card companies.
It is amazing how this simple tactics works but be reasonable if you are paying over 20% then ask for 12% not 6 or 7%. If you are paying 11 or 12% then you should try for 9%. The lower your rate the less reduction you can expect. You will be fortunate indeed if you can find one at 1 or 2% above prime but this is possible and will depend entirely on your credit score and current promotional activity at the individual credit card company.
A credit card in your pocket is two things. One a financial product in the eyes of the credit card issuer and two a financial tool in your eyes. Once you let it become a financial product to you then you are headed towards financial trouble. Do not pledge excessive amounts of your future financial income to your credit card. Control your spending habits and always pay off your credit card debt when the bill comes in each month. The only pledge you should make is your tithe to the church. Always remember to “praise the Lord and pay the bill”.
What about transferring balances between credit cards? These offers should come with one simple instruction in big bold letters READ THE SMALL PRINT. If you are in a position where you have to consider teaser offers then your credit card debt is already out of control. Please keep in mind that many teaser rates can disappear if you are late by even one payment or within a given time period after the transfer. More and more the small print is actually permitting the new company to change the interest rate at will and possibly to a higher rate than your old credit card.
So please pay off your credit card every month. Be aware that one months missed payment cam affect two future months interest and always use your credit card as a financial tool to track monthly and annual expenditures. You should only select a card that gives cash back rather than hotel or airline points or some other similar awards, as this is a true financial measure with no black out dates or restriction on use. Of course more and more some card companies are providing both options and if you select one of these then you give yourself added flexibility but always make sure that your card has the redeem cash option.
So what do you do once you have control over your debt? Do not forget that many have been there before you (in debt) and many will be there after you some for the second or third time so start today to take charge of your finances and do not become one of those who do not change their ways and as the bible says like a dog returned to eat its vomit.
Use your credit card wisely and you will find it both a useful and invaluable tool.
God Bless you and yours
Proverbs 22:7
You have seen them on television, heard them on the radio and definitely had them stuffed in your mailbox. Advertisements from credit card companies for everything from flowers, diaries, chocolate and watches to life insurance, rewards programs, luxury hotels, vacations and weekend get aways. The perfect couple pictured enjoying themselves by a sunny pool or on a deserted sandy beach. Supplemented with special offers from automobile rental companies, airlines, hotels and fancy restaurants all packaged to make you dissatisfied with the way you are living and to make you feel that you deserve the good life because you are entitled to it. This great life style is yours for the asking because you have arrived. You have good credit!
Fact is you are entitled to nothing you have not worked for. You are being asked to give them your budgeted expenditure plus your discretionary expenditure but much more importantly to pledge your future income whether from earned or unearned sources.
Lose your job, get into financial difficulty due to poor health or fail to consistently pay at least the minimum required payment and these same corporations will introduce you to collection agents, lawyers, debt collection agencies, bad credit reports and all the while continue to send you offers of more plastic at ever increasing higher interest rates. You go from living the high life and being made to feel special to a person of low self-esteem and a life of misery.
Should you have a credit card? Absolutely but as a financial tool to do your bidding and as a mechanism to help you in tracking and controlling your spending. Control! You say control. Yes control because the credit card company does something most people are too lazy to do, they track all of your spending and document it. Some credit card companies provide you with a copy monthly free of charge if you pay off all of your balance each month. Even if your card has an annual fee is it not a reasonable price for this data collection and correlation? How much time and effort would it take you to come up with this accurate an itemized list? Use this information as an action item list to control your annual expenditure and to plan your credit purchases.
What about errors on credit charges? Do these happen? Yes of course they do but they are rare and almost all credit card companies will work with you to solve any legitimate mistake or erroneous charge. It is after all in their interest (literally) to keep you as a client.
Ask yourself why does the mortgage rate drop with the interest rate set by the Fed yet your credit card interest rate marches on. The answer is simple no legislation or government mechanism to make them. You will hear them say that a competitive market keeps interest rates low but this is not so. So how do you get the credit card companies to cut your rate? Simple tell them you are going to change credit card companies.
It is amazing how this simple tactics works but be reasonable if you are paying over 20% then ask for 12% not 6 or 7%. If you are paying 11 or 12% then you should try for 9%. The lower your rate the less reduction you can expect. You will be fortunate indeed if you can find one at 1 or 2% above prime but this is possible and will depend entirely on your credit score and current promotional activity at the individual credit card company.
A credit card in your pocket is two things. One a financial product in the eyes of the credit card issuer and two a financial tool in your eyes. Once you let it become a financial product to you then you are headed towards financial trouble. Do not pledge excessive amounts of your future financial income to your credit card. Control your spending habits and always pay off your credit card debt when the bill comes in each month. The only pledge you should make is your tithe to the church. Always remember to “praise the Lord and pay the bill”.
What about transferring balances between credit cards? These offers should come with one simple instruction in big bold letters READ THE SMALL PRINT. If you are in a position where you have to consider teaser offers then your credit card debt is already out of control. Please keep in mind that many teaser rates can disappear if you are late by even one payment or within a given time period after the transfer. More and more the small print is actually permitting the new company to change the interest rate at will and possibly to a higher rate than your old credit card.
So please pay off your credit card every month. Be aware that one months missed payment cam affect two future months interest and always use your credit card as a financial tool to track monthly and annual expenditures. You should only select a card that gives cash back rather than hotel or airline points or some other similar awards, as this is a true financial measure with no black out dates or restriction on use. Of course more and more some card companies are providing both options and if you select one of these then you give yourself added flexibility but always make sure that your card has the redeem cash option.
So what do you do once you have control over your debt? Do not forget that many have been there before you (in debt) and many will be there after you some for the second or third time so start today to take charge of your finances and do not become one of those who do not change their ways and as the bible says like a dog returned to eat its vomit.
Use your credit card wisely and you will find it both a useful and invaluable tool.
God Bless you and yours
posted by Wisdom at 11:33 PM
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