The credit card companies are making smart money since long. They have a little odd way of showing that they want customers to be debt free. They will always try that their customers make use of more and more of their credit limit and they can make huge profit on it. The Annual fees, balance transfer fees, limit increase charges; over limit fees and so on these companies will not miss any damn chances of charging their customers. This is nothing but a debt trap, if you choose them without proper consideration of its terms and conditions.
It has also been proved that credit card companies charge the highest interest rate in the industry from their clients. Off course a credit card company has a vested interest in making sure that customers keep at least some balance. Using a combination of interest and monthly payment, a bank can make huge profits. It has been seen that if you will go deep into the credit card debt you will be unable to repay the debt. At this time they will be willing to negotiate with you. They will ask you to pay some lump sum payment and they will forgive some of the debt amount. Also they may agree to waive of the interest and you need to pay the principle amount immediately.
So the answer will be yes or no. Yes â€“ they want you to keep an outstanding balance and to be in debt to them. No â€“ it means they don't want you to be completely without funds, to pay them at all. The credit card has made human life so open that even if you do not have perfect cash balance then also you can afford to make purchases for your desires. They are easy to get and allow us to spend money we don't have. This makes the use easy and comfortable. They bring us in comfort zone and we become addicted to it. Credit cards are popular because they play perfectly into the human desire for instant gratification. With a little discipline and cautiousness you can beat the credit card companies in their own game and make good use of it.
The use of credit card should be restrictive. You should use the card only when you are in urgent need of money and still there is some time in your next pay check. You should be conservative on your desires and make purchases only keeping your monthly pay check into consideration. Affordability of things will depend on how much you earn and without including your credit card limit, because the card will sooner or later will make you pay more than you expect. Also you will be under pressure that you have to pay its monthly instalments.
Through your credit card statement you will be able to see your due payment, outstanding payment, your overall credit limit and the time limit up to which you need to clear your debt and how much time it will take if you pay minimum charge every month. This will be somewhat depressing to you to look at that period and you will get idea that now you are in a debt trap.
In such huge credit card debts, one can apply for no credit check loans and pay off their debts. Consolidation through these loans is other way of doing it.
Anny is an up and coming finance blogger. She gives updated information on financial issues. Click here for more information.