While the regular deluge of consumer credit opportunities has certainly dimmed over the past few years as part of the latest American financial crisis, an ordinary household in the United States must nevertheless suffer through on average two to three unsolicited advertisements for revolving debt each week, according to a recent study.
While most of us would reflexively crumple up the junk mail with barely a second glance, the recent economic deprivations have drawn many unemployed and struggling heads of household to first consider such offers despite their better judgment in order to avoid be victim to massive credit card debt.
Admittedly, if borrowers with less than perfect credit scores are in need of another credit card, they may as well take a closer look at the deals promised to see if one of them would genuinely fit the requirements of their household.
The truth in lending guidelines imposed by the federal government effectively preclude the direct mailing brochures from printing out and out lies, but the lenders exploiting what remains of the sub prime market shall certainly do everything within the very edge of the law to mislead potential customers about the eventual price and terms of their agreement.
While your authors could never hope to fully prepare the curious consumer for every single trick of the trade that the less professional creditors may utilize, there are a few especially common elements which should be watched for whenever examining the viability of a credit card proposal.
Where There’s A Willingness To Borrow, There’s An APR
Most Americans are more than familiar with the mathematical intricacies surrounding the Annual Percentage Rate which will determine the finance charge assessed upon every dollar borrowed unless the account is completely satisfied by the payment due date.
As a means of tempting the more discriminating consumer to consider one card over another – especially if there’s a possibility of transferring the balances of another line of credit – initial interest rates could be as low as two or one or even zero percent. Make no mistake, however, the APR shall soon climb to the normal levels for unsecured revolving debt (around fifteen percent) as soon as the introductory period, generally less than a year, has passed.
Compound Interest & The Dogs Of Debt
While most United States consumers who take out credit cards have already consigned themselves to the inevitabilities of carrying some additional debt loads and paying the ridiculous interest rates associated, they may as well shorten the number of days in which the finance charges shall compound.
Though few of even the most careful credit card account holders are familiar with the specific terminology, the lenders that advertise their interest rates as set to adjusted balance rather than average balance could potentially save a client of the former program a good deal of money since interest will only begin to accrue after the first month rather than the day on which the debts were borrowed.
No Such Thing As A Fee Launch
Even if the Annual Percentage Rate has been capped at a reasonable interest and the terms are structured to best help the consumer avoid extraneous finance costs, the credit cards advertised through direct mail programs are famous for the inclusion of annual (or even monthly) fees for such specious reasons as transactions or billing support. Not only are these expenses fundamentally unnecessary, they could quickly add up to a sizable portion of the balance before you’ve even charged your first purchase!