The credit card business

Jan 24,2021

The credit card business

Credit Card Issuers always comes up with discounts, rebates, freebies and possibly zero fees to attract and maintain its card holders. How do they sustain their business and continue to market their cards so aggressively? If you pay in full your outstanding credit card debt monthly, all these freebies would mean that the credit card issuer is paying you to use their credit card! How then does the credit card company still manage to earn a lot of money through the credit card market with all these freebies and having to deal with credit card defaulters at the same time ?

What’s A Small Price To Pay

Firstly, credit card companies want you to sign up with them. A gift is but a small investment on their part and by buying in bulk, the gift becomes cheaper at cost. Once you are a credit card holder, chances are you will start using the card and that is when they get their commission from merchants. If you fail to pay in full, you pay penalty, fees and interests. Before long, the small investment has been paid for and you start earning money for them through spending.

Long Term Commitment

The longer you stay with them, the more you are likely to spend and the more they will earn. To encourage their credit card holders to stay longer, they come up with incentives like loyalty bonuses and installment interest free payments for expensive purchases.

Need Quick Cash

This is one of the biggest killers! Cash advance earns the credit card company advance cash fees. If you fail to pay the stipulated amount monthly, you are heading for a shock with the credit card interest charges payable. Read the fine prints for cash advance charges and repayment terms. The charges are usually higher than a personal loan.

Annual Fee Waivers

Annual fee waivers do not significantly impact the credit card issuer’s profits. Some annual fee waiver comes with conditions eg. provided you spend X amount of dollars every month or annually. Invariably, they earn back what they lost through merchant commission.

Give Us Your Outstanding Credit Card Debts

Why would credit card companies want to deal with your outstanding credit card debt from another credit card issuer? Well, firstly, if you are disciplined enough, you wouldn’t have incurred credit card debts which attract high interests payable. By balance transfers, you pay the credit card issuer an administrative charge. If you are still not able to keep up with the new terms of payment stipulated by the new credit card issuer, chances are you will be slapped with the maximum interest fee chargeable. Then you are back in square one and what the previous credit card issuer lost is now the new credit card issuer’s gain.

So, do you see how lucrative the credit card business really is? And these are just the tip of the iceberg.

How to get out of credit card debts

Credit Card Debts are reaching a worldwide high as a result of the rising prices and inflation resulting in many credit card holders being unable to cope with the outstanding credit card amounts. As credit cards offer the card holder a temporary credit period to pay for their purchases, it is not surprising to find many credit card holders being tempted to spend more than they could afford payment.

With high compounded interests in the form of APRs on the outstanding balances plus a host of fees and penalty payable, what may seem to be a small amount outstanding can snowball to an unmanageable credit card debt nightmare in just a couple of months. The following are some tips which would be useful to you to get out of credit card debts.

Communicate

If you realise that your credit card debts are spiraling out of control, you should quickly call the credit card company or pay them a visit. Be honest and tell them about your current financial situation. Explore with them the possibility of an extended period to pay – for example, request the lowering of the interest rate of your credit card or restructure the credit card debt. Credit card companies are only after your money and as long as you are willing to pay and they don’t really lose out, some might be flexible enough to accommodate your wishes.

Halt

Stop using your credit cards. Reassess your spending habits and refrain from incurring further credit card charges. Further spending would compound to the interest charges if you fail to pay in full the previous month’s outstanding credit card debt. Be thrifty and just spend on necessities, not luxuries. Work our a new monthly budget based on your income and liabilities and reduce unnecessary expenses. You got no other way other than this.

Cover It

Put in as much money as possible to pay your credit card debts. If you have many cards, pay the card with the biggest amount outstanding and try to extinguish the debt there first. Make it your goal to pay in full each month. Try not to settle for paying the minimum amount payable unless you are in an emergency. If you skip your credit card payments, you are asking for trouble. Your credit card profile might even be blacklisted!

Consolidate

Stick to one credit card or two, if you must. Having too many credit cards increases the chances of overspending. The fewer credit cards you have, the easier for you to monitor your expenses and payment. Consolidating your credit cards allow you to monitor your due dates with ease and lessen the risk of your missing a payment. If you are still credit worthy, apply for a personal loan to pay off all your existing credit card debts. The interest rates for personal loans usually lesser than the prevailing credit card interest rates. That should help you to ease your outstanding debt on your credit cards.

por etnpool

Jan 22,2021

understanding apr

What’s this thing called APR which is oft quoted especially for credit cards? APR means the “annual percentage rate”. APR prescribes the interest rate you will be paying if you have a carry over balance. The credit card APR which may be different depending on the credit card transaction.

Multiple APRs

One credit card having different APRs for different transacations – eg. one APR for purchases, one different APR for cash advances. In most instances, the APR for cash advances and balance transfers are higher than the APR for purchases.

Tiered APRs

This is where different rates are applied to different levels of outstanding balance. Usually, it can be higher APR for lower amount outstanding and lower APR for higher amount outstanding or vice versa.

Penalty APR

You are slapped with an APR increase if you are late in payments.

Introductory APR

You get an introductory APR for a limited period and usually, the introductory APR applies for new cards. Upon expiry of the limited period, the APR reverts to the conventional APR.

Delayed APR

This simply means that the APR is delayed until a period stipulated in the future. The future APR might not be known as yet.

Fixed vs. variable APR

With fixed rate APR, the APR is pretty much constant over the whole usage of the card unless there is a clause which allows the credit card company to change it at their discretion and upon notice. Look out for this clause.

Variable rate APR changes from time to time dependent on the interest rate it is pegged to. This can be the prime rate or the Treasury bill rate. So, if the other rate changes, your APR will also move in tandem whether it be upwards or downwards.

por etnpool

Jan 14,2021

Leasing a Car Versus a PCP – The Key Differences

So, you need a car. Perhaps it’s to get to work, maybe it’s to do your work or simply get the kids to school on time in the morning. Whatever the reason, you just know that a car is what you need. Perfect, just head to a garage and… Wait. PCP or leasing? What’s the difference?

The answer, sadly, is quite a bit. Everything from the way your payments are structured to what happens to your car at the end of your agreement are different under a PCP than a leasing agreement.

What happens at the end of the agreement?

On a PCP

A PCP (Personal Contract Purchase) is, effectively, a form of hire purchase. What do we mean by that? Well, the ownership of the vehicle is with the finance company until all payments have been made. You’re still the registered keeper, but the vehicle is owned by the finance company.

With all your payments made, you’ve got a few options:

Want another car? Simply hand it back to the finance company, with no extra fees.
Want to keep the car? You can settle your agreement by paying the remaining value on the car, as laid out in your agreement.
Want a different car? Part exchange it. Depending on the value of the car, you could be able to cover the deposit on another car.

In a Lease

Leasing is simply hiring a car for a set period of time. So, at the end, your only option is to give the car back. Thankfully, leasing companies will often come and pick up your car on a pre-arranged date, and even drop a new one off for you, if you choose.

Do you pay a deposit?

On a PCP

Yes. Often you can pay as much or as little as you’d like, which affects how much you’ll pay on a month-to-month basis.

In a Lease

No. You will need to front up an ‘initial payment’ however. This is usually a 1,3, 6, or 9-month up-front payment. Following that, you’ll pay a monthly sum and, just like a PCP, the higher the initial payment you choose, the lower the monthly payments will be.

Can you change your mind?

On a PCP

PCP agreements are more flexible than their lease counterparts and often allow you to:

Change your car if, say, you need more seats for an upcoming addition to the family.
Need to increase the number of miles per year

Depending on your contract and situation these changes might incur a fee, or they could be free. When investigating a PCP always ensure that you read the terms of your contract closely. Do note however that if you wish to cancel your PCP you will typically have to pay up the entirety of your contract.

In a Lease

Leases offer far less flexibility if you want to make a change like swapping vehicles. Typically, your only option is to cancel your agreement and pay any remaining payments. However, some leasing companies just charge a fee for cancelling.

Are there any additional costs?

On a PCP

Insurance is still required on a PCP, so factor that in. You’ll also need to consider the fact that VAT is on top of your quoted PCP prices. Additionally, most PCP providers will offer maintenance packages, an additional monthly fee which will take care of any mechanical issues you might come up against.

In a Lease

Leases tend to be cheaper than PCP deals, largely because the finance company can claim VAT back on their vehicles. As such, no VAT is payable on your end either. You’ll still need to insure your car though and, just like a PCP, there’ll be an optional maintenance package if you want it.

por etnpool

Jan 9,2021

why your outstanding credit card debts keep increasing

The temptation and the ability to get numerous cards at one time is usually the main reason why your outstanding credit card debts keep increasing as it often results in cardholders losing control of their finances. It is like facing an unsurmountable wall of debt!

Decline in your disposable income due to the rising costs of necessities and not budgeting properly or prioritising debts, usually means credit cards are used to extend your income and budget to make ends meet and pay for daily living expenses, which does not help either.

As home values have decreased recently, people that used to use equity in their home to pay off their credit card balances monthly are suddenly struggling to control their outstanding credit card debt.

Added to that, not having health insurance is also a common reason why outstanding credit card debts keep increasing as people tend to use them for paying for prescriptions and doctor bills.

Making minimum payments only might seem like a good idea but often that does not put the slightest of dents in your outstanding credit card debt because of reasons beyond your control.

Here are other reasons beyond your immediate control that may cause your outstanding credit card debts to keep rising:

Increasing minimum payments based on the government’s Office of the Comptroller of the Currency (OCC) guidelines which directed all major credit card companies to increase the minimum balance payable on credit cards, have meant that some people couldn’t meet the new payments and resulted in an increase in credit card debts.

Double cycling billing, terms of which are normally in your initial agreement, is whereby the cardholder charges, for example, $500 to the card, then repays $400 and leaves a $100 balance on the card but the interest charge accrues not only on the $100 balance, but on the full $500 for the month.

A a dizzying array of extra charges levied by credit companies such as late fees and higher interest rates, over-the-limit fees, phone payments, “expedited” online payments, credit card use overseas (currency conversion fees) and balance transfers from other cards make it a whole lot harder to keep your balances very low and are also attributed to ballooning outstanding credit card debts.

Late fees are a particular concern as a number of credit card companies and banks are setting a cut-off time on the payment due date whereby payments have to be received before a specified hour on the due date meaning that you may be liable to a late fee even if you have good payment behavior. The credit card companies and banks usually disclose this cut-off time in card statements and online – the small print you tend to ignore – which they say is is intended to give the bank “sufficient” time to process payments made on that day.

And for those with low rates or special offers on their credit cards, paying late – even one time – often means such deals are off.

Regardless, interest-free grace period or low initial rates offered when you sign up are usually replaced with floating rates, which can rise with the market, after a certain period.

The fine print of your terms and conditions usually allows for the increase of interest rates on your credit card.

Often a spectrum of interest rates are charged, such as one rate for purchases and one for cash advances, and in the event that you pay late or spend past you credit limit – even one time – your purchase rate can be raised to a penalty rate of up to 30%. And such rates can rise on transactions months or years after you made the purchase.

Another reason your credit card debts keep increasing is because card issuers tend to adopt a “universal default” policy whereby they study your payment history not only with their cards but also with other creditors, such that if you pay a utility bill late or your overall debt grows, they will raise your rate.

Over-the-limit fees are also to blame with many credit card issuers charging multiple over-the-limit charges in one month based on any purchase during the month that puts you over your credit limit — rather than if your balance at the end of the month does so.

por etnpool

Jan 3,2021

What You Need To Know to Apply for the Credit Card

One of a disadvantages of complicated times is which people lend towards to take so most things they do not unequivocally need.

Numerous gadgets as good as services occurred targeting a immeasurable marketplace of consumers as good as this presentation of assorted inventions someway without eyes people.

Since financial government “especially money” iis a single of a vital concerns of most people, a far-reaching form of monetary government services as good as monetary options emerged. One of a most manifest between a constant line of monetary government services there have been is a credit card.

Although most people attest for a monetary preference we get when we request for a credit card, it doesn’t meant which any financing preference relates for we or for everyone in which matter.

When people request for a credit card, there is regularly a reason. It can be for handling their finances, wanting additional income or in credentials to a large expenditure. But, no have a difference what a reason is, people request for a credit label since of a idealisation preference it brings. By now, we might have had your share of “pre-approved” credit label offers in your practical as good as earthy mail. Since people have been utterly exposed when they request for a credit card, a little credit label issuers captivate these people by giving low rudimentary APR, no annual price offers between countless perks. The bent of this so most alternatives as good as “value” deals is to lean a chairman who wants to request for a credit card.

There have been certainly unconstrained lists of pros as good as cons when we request for a credit card, though if we unequivocally have motionless to request for a credit card, these have been a little of a beneficial tips which can beam we upon your credit label selling journey.

Actually, there have been 3 easy stairs we should follow if we have motionless to request for a credit card. First, roller a net as good as do a little investigate upon credit cards.

By we do this, we can reconnoitre yourself with opposite credit label conditions as good as types. Second, we can review countless credit cards which would most appropriate offer your needs as good as lastly, we might right away request for a credit label of your preference by stuffing out a credit label duplicate by upon vacation a bank deputy or by online.

In sequence to find a right credit label quick as good as easy, first, prior to we request for a credit card, have certain we mastered a credit label terms. When we request for a credit label we contingency know what a “credit card” unequivocally is. Being a form of borrowing which involves charges, credit cards customarily have underlying credit conditions as good as conditions start your altogether cost. So, it’s most appropriate to review conditions as good as fees prior to we request for a credit label as good as determine to open an account. Some of a critical conditions to be accepted good embody a annual commission rate or a APR.

When we request for a credit card, we contingency know how a APR affects your credit account. Being a magnitude of a price of credit voiced as a any year rate, a APR should be disclosed prior to we request for a credit label so which we would not be thankful upon a comment as good as upon your comment statements after on.

Aside from APR, a continual rate contingency be disclosed to a label hilt prior to they utterly request for a credit label so they would have an thought of their superb change as good as financial assign for any billing period. Other critical conditions to know prior to we request for a credit label have been giveaway duration or beauty period, annual fees, contract fees as good as alternative charges, alternative costs as good as feature, as good as change mathematics process for a financial assign similar to normal every day balance, practiced balance, prior balance, as good as two-cycle balances.

If you’re not which sort of chairman who is studious sufficient to investigate upon all these terms, have certain which prior to we request for a credit card, a issuer will give an reason how a change is computed as good as it contingency crop up upon your monthly billing statements.

por etnpool

Archive Janeiro 24, 2021