Cost of Credit Cards

Think of these costs for the simple privilege of using a credit card(s) (AKA: The cost of being in debt):

If $1,000 balance at 10% APR, $100/year.
If $2,000 balance at 10% APR, $200/year.
If $5,000 balance at 10% APR, $500/year.
If $20,000 balance at 10% APR, $2,000/year.

Typical interest rates range from 8% to 14.9%, with penalty increases that can send your APR into 23-26% range.

Let's double those costs:

If $1,000 balance at 20% APR, $200/year.
If $2,000 balance at 20% APR, $400/year.
If $5,000 balance at 20% APR, $1000/year.
If $20,000 balance at 20% APR, $4,000/year.

Imagine the cost of multiple credit cards. Pretty pricey food for thought.

Comments

[Elle]

I had a problem with one CC co and the interest was jacked up to 24.99%.
This was from paying the balances through online banking where the Co said they did not receive payments.
It is a game the credit companies do to raise the interest rates.
I found your site by putting in Keyword: DEBT.
So I would like to know, in your expertise, what is the best remedy to settle the dispute.
Or can anyone else offer advice -- any advice would be greatly appreciated.
Thanks.

[Susan]

It's always best to get everything in writing. If the online end of a bank received a payment but the company is not giving you credit for timeliness, there is a discrepancy. This is when having written confirmation (that reveals the date and time you pay) is critical.

I wouldn't go so far as to say that the credit card companies play a game, but you have to remember their job is to make a profit. The higher your interest rate, the more profitable a client you are. I would suggest negotiating a lower rate with this company. If they won't work with you on a better rate, I'd start shopping for a better credit card company.