It’s Saturday afternoon, the sun is shining in, I’m sitting on my bed with a computer on my lap, music playing, a cup of tea at my side but weekend red is soon on it’s way. There is washing waiting to be done, the kitchen could do with a tidy and the week’s mail remains unopened. However my current sloth is not my greatest sin of the weekend.
This weekend I was charged interest on my Credit Card ******Fool!
That’s not the worst of it though, because I know how credit works, I should know better. Understanding and knowing the rules makes breaking them worse.
Listen Up – If your going to play with the bad boys in town expect to be bitch slapped unless you know how to do it on your own terms.
In my Part One of How to Go Cruising I did say that Credit deserves a whole page on it’s own – so here it is the Ugly Truth on why Banks are really rich and so many of us ordinary folk who use credit stupidly are not.
(Note to you – If you wonder why I place capitals on Credit Cards, it’s because these tiny bits of plastic deserve your RESPECT. Lets proceed.)
Most people do not understand how Credit Cards work but most of us have one or multiple Credit Cards we use everyday without even thinking.
The Big Question of the Credit Card – Do you Pay the Full Amount Outstanding On or Before the Due Date?
If you do not pay your Credit Card off in FULL by the statement date, you will pay ridiculously huge interest on every purchase from the very first day you whipped that piece of plastic out and paid with money you did not have in your pocket.
Banks Are Sneaky
Why, because on the statement there’s a lovely word, minimum next to payment due. They whisper quietly in your ear and say don’t worry my dear, you only have to pay this little figure off as a minimum.
Who wants to face the evidence of how much we owe, when a gentler kinder word like minimum says its OK just pay this little amount. In fact when you pay this figure each month we can be friends for a very long time. Your bank will love you.
Hello Stupid! By not paying the full sum each month you are effectively being patted down by the loan shark as he quickly removes the money from your pockets quicker than a Romanian child pick pocket.
All bank credit card statements should have in bold large lettering.
You Are In Debt This $**** Figure And You Need To Pay it Back, Not In The Future But By The Due Date
Hands up who has moved past the big figure due to look for comfort from the minimum payment figure….
If you want to use Credit Cards, If you want a good Credit rating, YOU must take responsibility to pay off the full sum before or on the due date. Minimum payments are just another way of slapping you down for being an idiot.
You might think I am being too harsh at this moment calling you or someone you know an idiot and FOOL but its true. Using Credit Cards and really understanding how they work to your advantage is a conversation that is not happening enough around the dinner table, at our schools or at work.
OK I Will Be Nicer – UNEDUCATED FOOL
Many folk just don’t know. I know and I still made a mistake. Banks make it easy to go wrong because they are counting on you not to pay in
Now you Know. If you use Credit you have to pay that sucker off before you pay for anything else. This anything else includes everything, because nothing, I mean nothing, is charging you 21%, to 30% interest like your credit card.
Before you buy another thing or pay another bill, this includes all bills like mortgages, school fees and reward me luxury items (that I talked about in Part One) you must pay off your credit debt first. Yes you can buy food and pay rent but that’s it. Pay Your Credit Card Debt FIRST.
Go back and read how to go cruising part one and stop spending money on shit you don’t need.
Banks Are Sneaky – 55 Interest Free Days
When you read the bold heading that says you have up to 55 days interest free you may think you have 55 days on your purchase before you pay interest. Nope you don’t.
The day I realised how 55 interest free worked I was so cross with myself for not understanding. Then I was embarrassed. My friend Clint said this fact in casual conversation and I said “I know” but bullshit I didn’t know. Then I couldn’t believe I didn’t know, but I certainly wasn’t putting my hand up in public to say I was dumb and ripped off by a bank. Sorry for being a coward Clint, now is my public atonement.
I thought that every purchase had 55 interest free days. Pfft!
If you buy an item on your Credit Card on day one of your new statement, you have 30 days (of the statement month) plus 25 days till your due by pay us the money. 30 + 25 = 55 days. You always get the payment days after the statement closes though.
Do you understand
Yes you have 55 interest free days but only IF you buy all your items on the first day of the statement month. Mostly you have less because we spend money on our cards at all times throughout the spending cycle or the monthly cycle. Tricky hey.
So How Do You Get Interest Free Terms Back
Simple really, you pay your credit card off
Sneaky Bankers They Charge You Interest on Interest
What happens if you don’t pay off the full amount each month, but only pay the minimum. Well here is the kicker, you get to pay interest on the interest. You not only pay more for all those items you purchased you get to pay the bank a fee for the purchases. Then every month you pay them a little more. Compound interest is a powerful thing and makes banks very rich.
Bitch Slap Two – Late Fees
If you don’t pay anything off your card one month or you don’t pay off the minimum amount you get a late fee as well as the joy of interest. Late Fees are not a slap but more of punch to the guts.
Your Sorry Arse Debt Can Be Sold To Another Party – Warning Avoid This!
What happens if you put your head in the sand and don’t deal with your credit card debt? Well banks are in the game to make profit, and rightly so, they are a business with share holders not a charity. So you don’t pay, you make no effort and hide away from the issue. Banks then get pissed off and sell your debt to another party at a loss. Banks decided it’s better to get a little money than none, so they on sell. Plus door to door collections never look good for a bank so better to sell your crummy debts off.
First thing you have to do is acknowledge your debt, just like an alcoholic you have a problem.
Second thing is get yourself some help. Talk to the bank they have specialists who will assist. It is essential you avoid your debt being sold on. Banks will talk to you and help, debt collectors won’t. Need I say stop using credit and do not apply for a card elsewhere. Do Not Go Down This Path
You Can Tell Me How Many Cards You Really Have
Cut the crap today is truth time. Bad Credit tends to have buddies. If you have one bad Credit Card then you statistically tend to have more.
Every time you see a bright shiny new offer with no interest period and you roll over purchases your just rolling over for another financial beating. Banks and Debt Collectors only want to make money and that means taking it off you if you let them. The horror gets worse though, because now you have two cards not one. The financial mess is only getting deeper as most likely you haven’t changed the spending behaviors that got you into this mess.
You need help. This is a good time to act and go and seek it if your in credit card trouble.
Interesting Facts About Credit Cards
By paying only interest each month many cards will take 25 years before you clear the debt. Some cards never get you in front so its a debt forever. You must pay off extra even if it is only $10 per statement.
If you are one day late on paying your statement in full, even if you are one dollar off paying the full amount, you will be charged interest on every purchase for the statement period. Nice
Banks don’t like it when you reduce the limit but it is your right to do so, don’t let them talk you out of it. Even if you don’t touch your Credit Card, whatever the limit is on the card this is considered as loan against your name because it is available to you 24/7 365. Reduce or remove credit if trying to get a home loan or you need a better credit rating. Even if you don’t spend it it is considered debt, and bad debt at that.
Banks have to ask your permission to advise you of new credit limits and ask your permission to advertise to you – I always say NO.
If you die with a Credit Card debt some banks wipe the debt rather than go through the process of going through the estate. Dying is extreme to avoid a debt and your bank might peruse the estate so better not test this theory
Because our banker decided that Captain being male should be the Primary Card Holder he owns all the debt. I can spend all the money and run away and the debt has nothing to do with me. So if you’re the Primary Card Holder PCH, be careful who you give a second card to. You are effectively giving them the balance left on your card no questions asked.
Not being the cards owner PCH, goes both ways, because I don’t own the debt I don’t see the statements so I have to work out the payments on my balances. That’s why I was late one day paying and why your now reading this rant. Did I say Banks don’t make it easy…
Many banks (not mine ) have auto payment plans where you can automatically transfer from a linked savings account to pay off the credit card when due. This can be in full, % amount or just the (avoid this) minimum. DO auto pay it’s smart and proactive on your behalf.
Some banks can stop you going over the limit of your limit, whereas others give you grace and let you spend more than the credit limit – nice don’t you think! No.
Credit Cards are so easy to use as they disengage the brain from needing to think “do I need this, or can I afford this” you just hand over the card and instant gratification – works like magic. You need to stop this mind freeze shopping. Just stop
Many people don’t use their rewards points, and if they pay interest on purchases to get rewards step up for bitch slap there. It would be better to have a lower interest rate than collect reward points you don’t use.
Just because a card says a stores name, it is still a credit card if you buy stuff on credit with money you don’t have, usually for stuff you don’t need. No I won’t call you any more names, as you’re starting to get the idea because you’re down here so still reading…
Some people have money in their savings accounts, redraw facilities or under their bed AND have debts on their Credit Cards at the same time. Somehow we have been convinced a little Credit Card debt is OK. No its not. Pay this bitch off now. Your Credit Card costs you more than any other debt you have with the Banks every time, kill this debt first
Annual Fee. If you pay for the privilege of a card it is now a one off fee conveniently charged to your card. That’s ok if your card is worthy and used correctly. You need to know when this annual fee is due, what you get to be in the banks credit team and answer is it worth it? Don’t worry though, this fee is in the small print. Surely You Remember.
The Best To Last – How Sneaky Can Your Credit Card Be
Credit Cards are designed to work as a vehicle for you to spend the banks money and pay for the privilege. So what happens if you have your money on your Credit Card?
Let’s say you have a $1000 credit card and you decide to go shopping so you put an extra $1000 on top of your credit card that currently has a $0 balance.. Sounds reasonable. Nope wrong again.
Your Credit Card will get confused, I kid you not. If you pop along to the local ATM and decide to withdraw some of your money, you will be charged HUGE interest immediately because the banks see this withdrawal as a cash advance. Worse still the bank may even stop your card because it thinks you are over the limit. How much fun and joy will that bring you, if you happen to be overseas or away from other sources of funds. I’m starting to feel a little punch drunk at this moment.
Then to add injury to insult, while your card is in credit you are no longer eligible for reward points.
Pretty sneaky don’t you think. Not because their products don’t act the way we want them to, but because they fail to inform we the customer.
Final one on this nasty business, your credit balance may even look like a negative figure you owe on your statement. I did say your credit card gets confused.
What If You Can’t Live Without A Credit Card
Yet you keep telling me you neeeeed your card. Why, because it’s the best system to pay with, it gives you rewards, it acts as an insurance policy and get out of gaol card (sorry the Colombian police like cash) and this piece of plastic allows you to belong and be in charge of future dramas and shopping opportunity’s.
Fair Play – I the Miss have a Credit Card so why not you.
Well you have two options. You have to use your credit card as it is meant to be used. Pay off the limit in full every month and without fail.
OR You get a debit Credit Card
A debit Credit Card looks like a Credit Card, it feels like a Credit Card and it pays like a Credit Card, the massive difference, it uses your money from your account and there is no loan shark arrangement between you and the bank. You can’t spend what you don’t have!
Are You Scared
This article is about the bad shit that occurs when you don’t use Credit Cards correctly. If this is not you, have the above conversation with your family, your children, your siblings or your friend who likes to shop and think budget is a swear word.
For the first time I am going to ask you to share this link. Why because so many people just don’t understand Credit Cards so we need to spread the word.
Not much scares me but Credit Card debt levels, and random, no purpose consumerism does.
Remember Budget is Boss and Credit Cards need to be in your budget and paid off ASAP. Be boss of these bad boys or they will bitch slap you and ask you to turn around and bend over as well.
With a big reassuring hug
the Miss x
PS When I saw my interest rate charge I immediately rang my banker and asked for a refund and because of my history and current rating I am expecting a refund. If you don’t ask you don’t know.
PPS Below is a short video explaining how credit interest works. Note these people are nicer than the Miss and won’t call you names. Remember though, I want to see you on your boat and sailing so this is said with love!
PPS I will write another article on what to do if you are in a financial mess and some simple steps on how to step out of the poo soon.
(Update on my interest charge – my bank manager wouldn’t refund the $58 interest charge but what he has done is remove the bank charges for transferring Au into Eu. I lose.I win. A bit like life really.)