If you use a credit card to pay off an 800 dollar bill can you pay it off over a few months by paying either the minimum payment or more or do you have to pay it all off the following month?
A credit card allows you to pay off your bill in installments
while a charge card (such as American Express) requires you to pay
off your bill in full each month. But it's not a good idea to carry
a balance from month to month, even if the credit card company
allows you to do so, because of the interest they charge. Every
time you don't pay off your bill in full, the overall amount you
owe increases. You can end up taking years to pay off your bill,
and you'll spend more on interest that you did on the item you
Here is a good read on what Credit Card companies do for the
citizens of the U.S. and Canada. They make big bucks off us!
Check out these anecdotes and important facts regarding consumer
We now have 50-year mortgages. It may be true that no one
looking for one plans to pay it over the fifty years; they will
sell what they hope is appreciating property or refinance it, but
remember how much you ultimately pay for credit is a function of
interest rate, monthly payment and the term. You always need to do
the math. The longer the term, the more you will pay. Our country
now has the worst savings rate since the Great Depression. At a
time when more bad things are happening to good people (divorce,
"job">jobreductions, increased medical costs), savings to
avoid financial ruin are more important than ever, but we are
saving less. Too many people don't save at all, let alone enough.
They hope for the best and plan for the best, so they have nothing
to help them weather life's inevitable setbacks. The majority of
car loans are now 5 or more years. Deficiencies on "upside down"
car loans are one of the major contributors to bankruptcies. See
Michelle Singletary's column Spending for Automobiles is Speeding
Out of Control. American consumers will pay more than $4.3 billion
in withdrawal fees during 2005 for using someone else's ATMs.
Making two withdrawals each week from another bank's ATM is
throwing away more than $300 per year. A recent automobile
dealership ad - " Come in and tell us what car you want, how much
you want to pay a month and we will make it happen." They can
probably do just that with up to a seven year car loan. Of course
the car will be " upside down" (you will owe more than it is worth)
long before the seven years are up, and you will probably want to
trade it in before the seven years., since it most likely a car you
"wanted" not necessarily "needed". Then you can pay it off, which
is unlikely, or roll the balance of the old car loan into the new
one and be "upside down" immediately. Then if something happens and
they repossess the second car,or you turn it in because you can no
longer afford it, and the lender sells it at auction, you will be
liable for a substantial deficiency. You should buy a car, used or
new, that you can afford to pay for in no longer than three years
or less. You should stay away from Rent-to-Own, Pawnshop, Payday
Loan and Check Cashing establishments. If you work out the interest
you are paying, either as interest or fees, it is shocking,
sometimes as much as 1800% per annum. You do have alternatives even
if you think that you don't. The CARE Program is developing
materials for the website, in conjunction with other entities, to
address this problem. Bank of America will soon be testing a new
program that will allow you to sign up for a credit card at one of
their ATM Machines. FINANCE YOUR "http://pets.answers.com" title="PET">PET
"http://pets.answers.com" title="PET">PET- New pet stores
spotted in Central New York offer a special credit card that allows
people to make payments on their "http://dogs.answers.com" title="dog">dog
"http://dogs.answers.com" title="dog">dog! The store sells
pricey puppies at a cost that would restrict many people who would
be unable to pay cash to a breeder. Cute puppies of many popular
breeds are featured in cold stark cages � and you can rescue them
for only $30 per month for the next five years! The credit card
application is featured in prominent places throughout the store
and the customer is urged to purchase many top-of-the-line
accessories to pamper their new best friend. The cost of the
puppies is substantially higher than average and the interest will
add up over time. (submitted by Megan Dorr)
In the CARE Program we say don't use a card ( credit or debit)
for purchases under $20.00, because using cash results in you
spending less when you have to make choices about your spending.
Using plastic is the very addictive behavior the card issuers want
you to engage in. More and more you see people using cards for
$1.17 cups of coffee, $1.75 ice-cream cones and other minor
purchases. Swipe, swipe, swipe. The card issuers love that
Why would a credit card issuer require only a $15.00 minimum
payment on a $3,500.00 balance, when even at just the average
interest rate of 15%, the interest on that balance for a month is
roughly $44.00? Next month, even if you don't charge anything, your
balance will be $3529 along with interest at 15%.
With some credit card issuers, when you go to pay your balance
on the internet, for which you are charged a fee, often $15.00,
within 48 hours of when your payment is due, there is already a
late charge built in. Why? Because they reserve the right to take
up to 48 hours to process an internet payment. Does that make sense
Here are some of the things that the Wall Street Journal had to
say in a July 23, 2004 Article entitled, As Cash Fades, America
Becomes A Plastic Nation:
For the first time, Americans used cards - credit, debit, and
others to buy retail goods and services more often than they used
cash or check in 2003.
McDonald's and other fast food outlets, the Wisconsin State
Police, vending machines, subway systems and charities now accept
When people pay with plastic, they tend to spend more - often
more than they have in the bank. Thus, credit cards also have
fueled an explosion in consumer debt.
Today, U.S. consumers use plastic to buy $2.2 trillion in goods
and services each year - roughly 20% of U.S. gross domestic
As cards spread, critics say consumers are running tabs for
increasingly routine purchases. "You could end up paying interest
on ice cream," says Travis Plunkett of the Consumer Federation of
Maria Nemeth, a psychologist in Sacramento, Calif., says card
usage is becoming so easy and pervasive that consumers are losing
the ability to budget. Using Plastic, she says, is as hard to
resist as junk food, and potentially as dangerous. She regularly
tells clients to go on 48-hour "crash diets," refraining from the
use of plastic for two days at a time.
Card companies say McDonald's found the average transaction
jumped from $4.50 to $7 when customers used debit and credit cards
instead of cash - in part, because cardholders tend to buy for more
title="college">collegestudents are being solicited on and
around their college campus to apply for a credit card, and receive
a free gift or other incentive designed to appeal to them, they are
often told just sign up, take the gift and don't even bother to
activate the card. No problem right. Wrong. Recently a young high
school teacher at a CARE Presentation told the presenter and the
students how this came back to haunt him. At the closing on his
first house the day his mortgage commitment was to expire, he was
told that the bank would not close on his loan until he closed the
many inactive but open credit card accounts that showed up on his
credit report. These were accounts that he opened in college, never
activated and didn't have records of anymore. He was forced to pay
a $1,000 extension fee for his mortgage commitment, something he
could ill afford, and to close all those accounts before he could
get his home. Were those gifts, probably only worth a few dollars
each, worth it?
Many consumers say they have more than one credit card because
of the perks or rewards that some cards offer like airline miles,
points against the purchase of luxury items such as cars or
computers, or even points that can be applied against a mortgage.
The list is getting longer and more creative every day. What is
critical is that if you are carrying a balance you must consider
the interest you are paying and perhaps the fee on that card when
evaluating whether it is a good deal for you. It may very well be
better for you to learn to live within your means, be consumer debt
free and just buy those airline tickets.
A recent MIT Sloan School of Management study showed that in
high dollar transactions the willingness to pay can be increased by
as much as 100% when customers are instructed to use a credit card
rather than cash. More about fees. Americans are big on
convenience, but at what price? Is the convenience of paying your
credit card bill by phone worth a $10.00 fee ( a stamp is still
$.37)? Fees for cash advances, to check your balance, to use an ATM
not at or provided by your own bank, and for any number of other
conveniences. These fees can add up fast. How about a fee for not
carrying a balance on your credit card?
The Georgia State Legislature is considering creating an online
lottery where people can buy lottery tickets using credit cards
instead of cash only.
Financial Institutions are now considering seven year car loans.
At what point during the term of the loan will the car be worth
less than the outstanding balance on the loan, so that if the car
is totaled in an accident and its fair market value paid by the
owner's insurance company, the owner would still have a substantial
deficiency to pay. When you consider the interest that will be paid
over the life of a seven year loan, how much more will that car
Many debit cards have automatic overdraft protection. However,
overdraft loans usually bear interest at the highest possible
credit card rate. It used to be that you had to ask for overdraft
protection. Now it comes automatically. Will some college students
whose parents think they are acting responsibly by only using the
debit card, be using this overdraft protection like a credit card,
but at the highest possible rates?
If you call the automated system of some credit card companies
to find out your balance so that you can pay it in full, the system
will only give you the minimum due. You have to wait for a
representative to actually find out your balance. Some online
services may not give you your balance, only the amount of credit
that is still available to you. Does this seem helpful or fair?
Could their messages be more clear? When they first came out
everyone referred to them as charge cards, implying that you would
charge your purchase and pay for it when the bill came. Now they
are referred to as CREDIT cards. The credit card industry refers to
those who pay off their account on time and in full every month as
"Deadbeats". Isn't that the world upside-down?
This year 35% of the revenue of the credit card industry could
be from fees - late fees, over-limit fees, balance transfer fees,
annual fees, etc. What could that mean for you?
If you make a purchase that will put you $10 over the credit
limit on your card, the credit card company will often approve the
purchase and also charge you an over-limit fee of as much as $35.
If you have a $20 balance on your account and pay it in full one
day late, you could pay a late fee of as much as $35.
If you pay off you account on time and in full every month, you
essentially receive an interest free loan of 30 days or more on
your purchases. If you carry a balance on your account of even $1,
interest accrues on all of your purchases from the moment you make
them. So you will pay interest even if you pay the balance off in
full the next month.
Often the interest rate on cash advances is higher than for
purchases. The interest rate on balances for store charge accounts
is often higher than for universal cards like Visa and Master Card,
and all stores take them.
Having many credit cards even if they have no outstanding
balances, lowers your credit rating because of availability. You
could max them out the next day. So why have them? Some credit card
accounts now provide that if you are late on any of your
obligations, it constitutes a default, and your interest rate can
be kicked up to the default rate. Most people think that means late
on your accounts with that institution. No it could be another
institution, a store charge or even a utility bill. Late pays show
up on your credit report.
More and more landlords are allowing rent to be paid by credit
card, as are utility companies. That may be great for convenience
users, but it can be a disaster for others who don't pay their
balances off every month, getting them into big debt fast.
NOTE: If you can't afford it don't buy it! Credit Card companies
what people to be in debt and keep them there. Most people make a
conscious effort to pay off their balances, but life is risky and
it's not always possible. As you can see from the above the Credit
Card Companies are sucking the public dry with high rates of
interest and even when they offer 0% interest rates, you have to be
careful--those rates usually don't last long (say, for onnly six
months). Stay clean, use your Credit Card only for purchases that
you need (rather than want) and that you can afford. If you're
thinking about buying something that you won't be able to pay off
all at once--don't do it (unless it's an emergency). Save your
money until you have the full amount--then, if you still want to
buy it, at least you know you can afford to pay for it.