I use my ne ocredit card to buy groceries and always pay them on time. My friend told me he's 24k in debt with one card at 18% interest. Plus this card doubles to 36% if he misses a payment. Im just wondering if this is standard with most major credit cards? If you miss a payment or two they double your interest rates?
question about credit cards
- Thread starter LittleAsianGuy
- Start date
nope not standard. most reputable major cards have a fixed interest rate tha doesn't vary based on payment history unless its a special deal from the US thats based on a certain payment history. I could stand to be correted on this but under certain statutes in Canada (can't recall the one back from univ.) thats illegal here.
homeless by choice
your friend could do like Andy Bussell... a guy who was on the headlines some time ago because of his choice to live in "extreme frugality"
http://www.getrichslowly.org/blog/2007/02/23/extreme-personal-finance-homeless-by-choice/
I think he paid all of his debt.
your friend could do like Andy Bussell... a guy who was on the headlines some time ago because of his choice to live in "extreme frugality"
http://www.getrichslowly.org/blog/2007/02/23/extreme-personal-finance-homeless-by-choice/
I think he paid all of his debt.
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the worse your credit rating is...the higher interest the banks charge you.
Your friend already has BAD credit.
Your friend already has BAD credit.
Maybe its time your friend start thinking about cutting up that credit card... His credit card doubles in interest probably because he's using a card that's designed for people with bad credit, and its continued usage most likely end up digging himself a deeper hole.
The most they credit card companys (or any financial instution) are allowed to charge in Canada is 29.99 APR, this is why the laws changed regarding pay day advance services a few yrs ago.
Ive never heard of a cards rate doubling if you miss a payment. Sometimes the companys offer special rates promotional rates for a period of time, like 2.9-4.9%, and if you miss a payment your rate will defer back to your regular intrest rate.
Ive never heard of a cards rate doubling if you miss a payment. Sometimes the companys offer special rates promotional rates for a period of time, like 2.9-4.9%, and if you miss a payment your rate will defer back to your regular intrest rate.
This guy is right on.
Your buddy has signed on to a credit card that is bound by the terms that are set out on the original credit card agreement. Have him read those and report back with the findings for a resolution.
Panther
I've got a sob/horror story similar to this.
About 5 years ago or so, I was laid off from my job. I found out that I had special insurance, where my credit card company would make my minimum paymetns for me until I became employed again.
I was unemployed for over a year, and never got any credit card statements, I figured all was good.
However, they were only making my interest payments or something like that, not other mystery penalties or service charges ( i no longer used the card at all).
To my horror, when I became employed again and phoned about my statements so I could start making my payments again, I now owed them just under 10,000... (my limit had been 5500). The other miscelanious charges and penalties took me over limit they told me, and my new interest rate was just under 29% - but they were still only covering my minimum payments at my old interest rate. The extra interest and penalties added up very quickly apparently.
Oh, and they upped my limit for me, without telling me, or sending me any statements. (thanks alot credit card company) 30% on $10,000 is a lot of interest on a credit card I originally had at 6% and for $5500 (and which was sent to me at christmas, on a year where I really needed some extra money....I just had to sign it to use it - Thanks alot again, credit card company)
I still feel like I should have looked into it more, I felt wronged.. but I guess I should have asked for statements right away (rather than assume everything was alright) I wass able to get a loan to pay them out in full, and tore up my credit card.
It was an MBNA mastercard, by the way.
Money management is one of the biggest problems for many folks. Before discussing credit cards, a few words of advice.
Always have a rainy day amount stashed in a redeemable mutual fund to shelter you in bad times for at least six to nine months. Until you achieve this security, limit your discretionary spending to absolute necessities... maybe a drag for a while, but a real bonus if you ever desperately need cash.
The real key to credit cards is to use them only if you can comfortably pay them off in full every month. If you cannot do that, then do not use them at all. Moderate your monthly CC buying so that no one month is heavy duty use.
If you are using them to finance a lifestyle beyond your means, stop using them immediately, pay them off and destroy them before your material addiction destroys you.
It may be sometimes (rarely) that CC debt is a panic backstop to having no money at all for necessities, in which case use the card very sparingly and pay it off immediately upon getting a job and money again. Then follow the "real key" use above. Needless to say, one would be much better off to have the rainy day fund rather than use CCs in panic situations.
Truly, CC companies are unscrupulous and try to lure you into debt to make money from you. But they cannot do it without you. The real culprit of your money mess is you and your appetite to buy now and pay (and pay and pay and pay) later.
Always have a rainy day amount stashed in a redeemable mutual fund to shelter you in bad times for at least six to nine months. Until you achieve this security, limit your discretionary spending to absolute necessities... maybe a drag for a while, but a real bonus if you ever desperately need cash.
The real key to credit cards is to use them only if you can comfortably pay them off in full every month. If you cannot do that, then do not use them at all. Moderate your monthly CC buying so that no one month is heavy duty use.
If you are using them to finance a lifestyle beyond your means, stop using them immediately, pay them off and destroy them before your material addiction destroys you.
It may be sometimes (rarely) that CC debt is a panic backstop to having no money at all for necessities, in which case use the card very sparingly and pay it off immediately upon getting a job and money again. Then follow the "real key" use above. Needless to say, one would be much better off to have the rainy day fund rather than use CCs in panic situations.
Truly, CC companies are unscrupulous and try to lure you into debt to make money from you. But they cannot do it without you. The real culprit of your money mess is you and your appetite to buy now and pay (and pay and pay and pay) later.
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That's insane i cant imagine having 60% interest on 24k of debt. I heard he get calls every week reguarding his missed payments.
Works a little diffwerently in the U.S.
As I understand it, the maximum interest rate depends upon the state where the card is issued.
Consequently, the greater majority of credit card solicitations come from one of two states: South Dakota or Delaware.
Why? Oddly, these are the only two states that have no usury laws, hence they can screw you as deeply as they wish. Their initial rates will always be competitive, but get a little behind in the payments and the sky is almost the limit.
As I understand it, the maximum interest rate depends upon the state where the card is issued.
Consequently, the greater majority of credit card solicitations come from one of two states: South Dakota or Delaware.
Why? Oddly, these are the only two states that have no usury laws, hence they can screw you as deeply as they wish. Their initial rates will always be competitive, but get a little behind in the payments and the sky is almost the limit.
