 Print this article |
 Email to friend |
Author: Morgan Hamilton
Contrary to what some may say, credit cards, by itself is not necessarily a bad thing. It can be used as a tool that allows you to purchase much-needed items while managing your cash flow. The only time it becomes a bad thing is when credit balances remained unpaid and interest accumulates.
Credit
Why would credit companies do that? It's because lending business is now more competitive than ever. So these companies look to expand their markets by tapping methods they traditionally wouldn't before. That is partially also the reason why almost anyone can be offered a credit card – even those with bad credit.
Sounds great, right?
However, you may ask, "how do these companies manage to practically give money away? Aren't they supposed to profit from the interests on the money they lend?"
To answer that question, you need to be informed on the often-untold catches to these kinds of deals.
For one thing, most zero percent offers only apply for a limited time, often averaging 6 months to possibly a year. People who are unaware of this often end up paying for a lot of things on credit well past the limited period. What happens then is that they find that they have been spending beyond their means.
That situation can be compounded by the fact that once the zero interest offer period expires, interest rates can go up to as high as the credit company wants it to. There have been cases where interest rates jacked up from 0 to 20 in a single billing period.
On the other hand, a 0% APR comes in handy when
( Next Page )
Rate this article:
(No ratings yet)
Saving ...
