Wednesday, October 18th, 2017

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If You Play With Snakes, You’re Gonna Get Bit

Why playing the credit card game will cost you big time.

Most college students get their first credit card during their freshman year. Some fall for the lure of a free t-shirt or free Mp3 downloads, while others figure they will get a card just for “emergencies.” The rest of us just can’t remember how we got our first card. Regardless, we all try to play games with the credit card companies. We transfer balances from one card to the next, we try to get the maximum amount of points for our purchases, or we just like that time between our purchases and when we actually have to make our payment.

                Do you think you can get one over on the credit card companies? They make billions of dollars every year on people just like you. They are well financed, with years of industry research, hundreds of millions of marketing dollars and teams of statisticians and economists (on the bright side, maybe you can apply for a job…if you can’t beat ‘em, join ‘em). No matter how many A’s you got last semester, please note that they are smarter, quicker and more experienced. Did you know that you do not get a grace period on new purchases if you carry a balance from the previous month? That’s right. You’ll pay interest from the moment you make your purchase. You don’t get any float time between your purchase and your payment and you’ll most likely pay more in interest than you get in points.

                Most balance transfers now require a 3% transfer fee, and the low rate lasts less than a year.  A 6-month 0% card with a 3% transfer fee is basically the same as paying a 6% interest rate. And that is only if you do everything else right during those 6-months. There is way too much fine print on your credit card agreement for you to come out ahead. So the next time you want to use a credit card to make a purchase, stop trying to justify your reason and at least be honest with yourself and admit the real reason you are using the card, like you’re too lazy to dig through your wallet for your debit card or you know you really can’t afford it.

Bill Pratt,

Author: Extra Credit

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