Originally published March 9 2005
Multiple credit cards often leads to unmanageable debt
by Mike Adams, the Health Ranger, NaturalNews Editor
According to the American Bankers Association, "past due" accounts have hit an all-time high of 4.9%. One potential reason for this growing trend is that the average household owns 13-14 credit cards, making it difficult to effectively manage debt payment. Most people are tempted to apply for new credit cards by advertisements for low interest rates, however these offers often contain hidden clauses, and more than half the time the consumer does not qualify for the advertised rate, according to Ed Mierzwinski, of the Public Interest Research Group.
Banks offer a tempting array of features and benefits if you sign up for their credit card.
Today, the average household owns a whopping 13-14 bank credit cards, retail cards, and debit cards, according to cardweb.com, a payment card research company.
Consumers who don't pay off their cards each month have an average of $9,000 in credit card debt, or about double what it was 10 years ago.
"Future creditors look not just at what you owe, but at what you are capable of borrowing," explains Michele Johnson, spokesperson for the National Foundation for Credit Counseling, a nonprofit credit counseling network.
If you can slash your APR -- that is, your annual percentage rate -- from 15 percent to 6 percent, you'll save $131 if you pay 10 percent each month on a $1,500 balance.
A report by Consumer Action, a nonprofit organization, found that more than one-third of issuers don't provide a firm APR until after they have screened an applicant's credit history.
For instance, you might send a payment in a few days late.
Advice: Read the disclosure statement that comes with the offer to find out what your APR will be once the initial teaser rate has expired.
Many cards charge balance transfer fees, typically around 2-3 percent of the balance.
Also, some apply the low APR only to the balance -- not to new purchases.
For instance, is there a waiting period before you can redeem rewards?
"Keep in mind, though, that even with prepaid cards it's possible to overdraw an account -- and run up penalty fees.
Depending on the bank, customers may also earn interest on their money.
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