02 Apr Cutting short credit card catastrophe
Plumbing supply giant Tradelink have edited this article written by Matt Reynolds for their industry magazine “Unplugged”. Cutting short credit card catastrophe is approximately a 2 minute read about using credit cards and the disaster it can cause. You can read the full article below or here, Enjoy!
Our ‘plumber from the trenches’ Matt Reynolds explains how to get your credit card interest back under control.
You’d be hard pressed to find someone who doesn’t enjoy the convenience of a credit card. We all proudly swipe for fuel and tap for fish ‘n chips because who doesn’t love racking up a few cheeky frequent flyer points while using someone else’s money? And then the dreaded bill arrives.
Financial institutions generate big profits from credit card fees and charges. These can range from international transaction fees to late payment fees. So chances are, if you’ve tapped more than a handful of times, you’ve been hit by a charge you might have glossed over in the fine print.
The most costly credit card fee is, not surprisingly, interest. Interest is a penalty that’s triggered when you miss a payment and is levied against the balance of your account. A fee breakdown can be found on your statement – this should be checked every month as interest rates as high as 20% are not uncommon.
Credit card accounts are designed so interest is easily and unknowingly triggered. Undoing those interest triggers is simple, but not commonly understood. Believe it or not, paying your account off in full and on time as it appears on your statement may not actually stop interest accumulating against your name.
Once interest is triggered, the only way to stop the charges is to pay your credit card account down to a zero balance. If you use your card in the time between statement issuance and account payment, the interest will not stop – even if you pay your bill in full and on time – because your account never actually zeros out.
Clearing interest triggers isn’t impossible. Just make sure you follow these steps:
- Stop using your card for at least three days.
- Login to your account and pay off the entire balance (this is different from a statement. You must look at the live balance and pay that off entirely).
- Do not use your card for another five days.
- Call the bank to ensure that interest has been reset to 0%.
Credit card transactions can often take several days to appear against your account, so it’s important that you allow for the above time frames as the bare minimum and speak with a representative from your bank to confirm your interest has been reset before tapping or swiping again. Take it from someone who knows, if a random transaction shows up in the process of clearing the account, your card won’t zero out and interest will continue to accumulate – which means you have to repeat the whole process again!
Business magnate and billionaire Warren Buffet offers this advice on credit cards: “The biggest suggestion I have is to avoid credit cards. Interest rates are very high on credit cards. Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, I’d be broke. So if I had one piece of advice for young people generally it would be to just avoid credit cards”.
Credit cards may be simple to acquire but are also really easy to misuse – so for the sake of your finances you should always use them with care.
Matt Reynolds is an award winning plumber who writes about the game as an industry insider. You can connect with him on Twitter @MrMattReynolds or find him as the Director of XRM Plumbing Services on LinkedIn.