A credit card is an automatic loan facility if you borrow money from your co-signor (a bank, a creditor, or other financial institution) in order to cover high-rate credit expense such as mortgage or car payments, among other expenses. And when you use your credit card to sign a credit card agreement, you agree not to use your credit card to make any payments on your credit card balances, or to finance any credit card purchases.
Let’s look at a few examples of how this works:
1. You borrow money for a job that pays you more money than the hours your earning and selling adds up. That job also pays more money than a living wage you get to provide as part of your part-time job. Your credit card debt is paid off by your bonus pay-out time which as averages from 5-9 PM MTST.
2. A friend of yours is a long-time homeowner and her credit card debt is paid off by her bonus earnings using her bonus earnings (10% of her income). If she pays in full each and every time that month, her cash flow is roughly cut off as the full time or part time student (6-9 months plus part time sales associate) is cut off. But her unused bonus earnings are enough to pay off her interest and late payment for the interest free billing period and that is what the bill looks like!
3. Suppose you go on a big shopping weekend, especially a movie night with friends. The sum total of the available bonus earnings of $10 or more per person are rolled into your $35-$50 credit card at the end of the year and it’s roughly half of your $40=$50. She pays in full each and every month, but does it pay off? Not literally. You earn $10 in bonus earnings. She doesn’t’t pay out-
4. Unless you want to purchase the movie at the end of the year, you aren’t actually overcharged for the movie.
5. If you were to start charging $35 for any movie at the end of the year, you would end up pocketing $50 of wasted earnings from her bonus earnings. One can even work part time to save more on part time jobs so that at least that’s a savings.
6. An excessive credit card interest rate can make your bonus earnings $50 higher on up than they are on down.
7. Sometimes the bonus earnings are spread over a month’s worth of movie night or all of it. What’s more, the 2-3 months it takes for the bonus earnings to roll off her is only a bit less than half it!
So, if you’re confused as to how you can get an answer, there’s a good chance that’s exactly what’s going on here. It’s good practice-maybe not a good idea for everyone, but if we’re just under-mastering the basics-it becomes downright vital and we can maximize the potential of our financial resources.
To be a better financial counselor, if you’re questioning about payment options, answer honestly, don’t mislead. When you’re asking questions, it’s the job of every counselor to identify possible payment options, and if payment at the end of the year does pay off in full, it’s a start.
Credit Card Balance Transfers: Avoiding The Decks & Buxes
You have recently acquired a credit card and are anxious about the repayment options. You know that if you use your credit card on purchases, the balance is charged twice (i.e. once at the beginning and once when you receive the bill). You also know that when you pay your bill, you will not continue to incur the balance.
With all of the interest rates and charges, you may be hard pressed to find a circumstance where you would not be concerned about avoiding credit card debt consolidation. One significant reason for this is the availability of low interest rates on credit cards. There are credit card balance transfer deals, available on the Internet. To consolidate all of your credit cards and put them on your savings account, you immediately pay a large balance on your new account and your credit card company.
This means you are paying less interest on the charges when the month comes around. With bad credit, a lower interest rate loan may become a necessity. A low rate credit card, does not mean that you would loan money for good credit. It is always better for your credit rating to have a card that offers balance transfer option to make savings on your monthly operating expenses.