To Your Health
May, 2008 (Vol. 02, Issue 05) |
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Putting Your Finances in Order
Consider the Consequences of Credit Cards?
By Stanley Greenfield
This article is the beginning of a "catch-all" series dealing with the financial questions most people have but don't know who to ask or where to go to get a straight answer. This month's article deals with credit cards, those magical pieces of plastic that can get us anything we want, including total financial ruin and yes, poor health.
Don't underestimate the connection between finances and health. If you're like most people, you worry about finances all the time, which leads to considerable stress - and stress is a major contributor to a variety of health conditions. Not to mention that the better positioned you are financially, the more prepared you are to handle those unexpected health crises and insurance headaches that can leave you with big bills.
Credit Cards: A Blessing or a Curse?
Ah, the credit card - the "I want it, I need it now!" generation finally has found the answer to its dreams. A little piece of plastic can go a long way; sometimes too long. However, after all the negative statements have been said, credit cards actually have some redeeming features.
This is one area that many have opinions about, but no straight answers. Credit cards can be your friends if used properly, or they can bury you. What do I mean? Most people are walking around with a "pocket full of plastic" and don't have a clue what they are paying for all of that plastic.
Know Your Interest Rate
I have seen interest charges as low as 0 percent and as high as 39 percent. Where are you on that totem pole? Not sure? That's your first big mistake. You need to be sure! It's time you did a little homework to save yourself from financial ruin or even bankruptcy. Pull out your most recent credit card statements and look in the lower left-hand corner. What's your annual percentage rate or APR? Unless your credit score is lower than your IQ, you should not be paying more than 12 percent. If it's higher than that, it's time to look on that statement for the "800" number and give your credit card company a call. When you call, don't ask, but tell them you have been a good customer and if they want to keep you as a customer they need to do two things:
- Lower your interest rate
- Increase your credit limit
They may say they just can't do that, but 70 percent of those who call and make those requests, get them. That is why you must tell them. If you ask politely, they will just ignore you. It's time to get tough because it can save you a bundle of money - and that bundle is better in your pocket than in theirs.
At this point, you may be wondering why I also told you to request an increase in your credit limit. The reason is because all of your credit cards won't go along with your request for a lower interest rate. So, once this entire exercise is completed, you are going to dump the ones that won't lower your rate and move the balances to the ones that will. The next step is to cancel those "bad" cards in writing and request written notification that each card has been cancelled. This is important because you don't want them to appear on your credit report as "potential" lenders.
Avoid Annual Fees
But wait, there's even more you need to know about those pieces of plastic in your wallet. If you have a card for a specific airline because they give you miles, it's not a good deal. The annual fees on those cards are very high - usually between $60 and $90 per year. The interest charges are also very high at 16 percent to 19 percent. This is a very expensive way to get a free ticket when all the fees and interest are applied. Many cards will give you miles not limited to any one airline and the interest rates are reasonable - if you've called and told them to lower the rate below 12 percent. You may not even need to pay an annual fee.
