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Credit Card Debt Secrets  

Dirty Little Secret # 1: Credit Card Debt Addiction

Consumer debt is way out of control, but the debt pushers just keep on pushing. The average consumer has between 3-5 credit cards with an average balance per card of R5,000 - R15,000. (That's up to R75,000 in debt in case you haven't done the math!) Millions of South Africans charge thousands of rands to credit cards every year.
Credit card companies keep offering us new cards on a weekly basis (think of how many you have gotten in the last year!) encouraging us to incur more credit card debt.

They know that most of us will be flattered when we receive our "PRE-APPROVED GOLD CARD" in our mailbox. We think we're being rewarded for a job well done. The job, of course, being able to spend money with the best of them and pay it back better than most. Don't get caught into this mental trap. Stop trying to keep up with the Jones'es. They are heading for bankruptcy anyway!

Dirty Little Secret # 2:  The Transfer Trap
Because banks know that credit card usage is at an all time high, most of them are killing each other to get your business. Many offer promotions like transferring balances from other cards to the new card they are offering you.

If you transfer your credit card debt from other cards, they say they will charge you a reduced rate of interest on those portions that are transfers. This sounds like a great deal (going from 25% to a promotional rate of say, 10.9%); however, most of them have a catch.

For instance, if you do not charge something on the new card each and every month, the interest goes up to the regular rate of the card (which is often high), or if you make one late payment, you forego the lower promotional rate, and the rate again goes up to the regular rate of the card. Beware of the "Transfer Trap." All you're really doing is transferring your pain from one company to another, and avoiding the real solution; finding a workable plan that will get you debt free once and for all.

Dirty Little Secret # 3:  Fine Print Fiasco
Example: Your rate of 10.9% is a teaser rate. After a few months, your rate will be 25%. The introductory (teaser) rate credit card has made credit card companies billions and billions of rands.

So few of us ever read the FINE PRINT. You know, the print that only the eyes of a 10-year-old can read without getting a migraine? There are too many "catches" to name. But, I assure you, they are there. Credit card companies do not make any money if they are financing your debt at below prime interest rates.

Dirty Little Secret # 4:  Minimum Payment Misery
If you keep making your minimum payment only, your balance will rarely ever get paid off. That is exactly what your credit company wants, too keep you in debt for the rest of your life.

Even the so-called "low-interest rate" credit cards don't show their payments going toward bringing down their balances. All they do is just require a lower minimum payment. Sure, this might help your monthly outgo right now, but what's it doing to get you out of debt faster? NOTHING! That's because the MINIMUM PAYMENT DUE ON CREDIT CARDS ARE BASICALLY "INTEREST-ONLY" PAYMENTS, and making the minimum payment on a credit card is a guaranteed way to NEVER PAY IT OFF!
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