Are You Recklessly High in Credit Card Debt?
By Ken Muller

In this increasingly cash-less society, credit cards have become a necessity. In fact, many people have more than one credit card. And, for various reasons, these people are close to their maximum limit on their cards. This is a reckless way to live. Because most people probably don't understand the ramifications of owing so much money at a high rate of interest - what the credit card costs are. For various reasons they don't understand what the terms are.

I have read somewhere that Albert Einstein was asked, "What was the most powerful concept in the 20th century?" He replied, "Compound interest." When a person gets deep into credit card debt he or she will be testing that concept, probably to its limit.

If you owe a thousand dollars on a credit card and only make the requested minimum payment every month - if you don't charge anymore on that card - it will take you many years to pay it off. The credit company will make many times more than the original thousand dollars from you. In some cases that thousand might, because of additional interest being added to it each month, continue to grow making it a continuous bill. This demonstrates the power of compound interest.

No wonder the credit card industry is so lucrative. But we are forgetting late fees, transfer fees, etc. Tons of money are made on these too.

I don't mean to bash the credit industry, they do serve a useful purpose. But if one has a credit card one has to understand the terms, and I don't think, for various reasons, the rules are real clear. It is up to you and me to understand those rules. You have to read and study the fine print when you are issued a card. Keep the original paperwork and study it. It will most likely prove to be time well spent. For example: you will know what to expect when you are late on a payment and maybe you will not ever pay late knowing that. This will save you money as well has maintain your credit record in good order.

Reading and understanding the credit card terms and conditions will inform you on other important issues. And when you call the credit company you will know what to ask and be able to interpret their responses.

I'm sure somewhere in the fine print is some kind of legalese that says, "We reserve the right to change or add to these terms at any time...". How do you get around this one? Well, you have to call customer services, this number is usually an 800 number somewhere on the card itself. Talking to these representatives can be very enlightening. Again here you can save yourself a lot of money especially if you are deep in debt to them.

So what is the bottom line? The credit card industry has the power of compound interest on its side. They are delighted if you pay the minimum each month - there is no better deal for them. This is exactly where they want you to be and to stay. Don't expect customer services to call you and offer to help you out of your debit crisis - only you can help yourself. If you are deeply in debt to them you have to make time to understand how you got there and what you can do to pay it off. In any case, always pay much more than the minimum payment.