The 5 Worst Lies We Tell Ourselves About Credit
By Allison Roberts on Wednesday, October 31st, 2007 :: 2:49 pmCategory: Watching Out 4 You
Most people can rationalize anything that allows them to buy something they badly need. Generally, these needs are actually wants, and the rationalizing process makes us feel better about the indulgence.
The credit crunch in America today proves that most consumers are either ignorant about credit or merely apathetic. A large percentage of people with credit cards carry a balance as well. Additionally, people are in debt more than ever before and searching for loans to get themselves out of debt – thus perpetuating the cycle.
Beware if you catch yourself in one of these lies next time you are rationalizing an unaffordable purchase:
I’ve earned it.
A feeling of entitlement can be detrimental to your finances if your bank account cannot back it up. Even if you work very hard all year, but make only $30,000, chances are you cannot afford a Porsche, even if you feel like you deserve one. Taking out a loan to buy yourself such a toy will cost you thousands of extra dollars in interest, not to mention the already exorbitant principal.
The credit card company would not have sent me this “pre-approved” card if I could not afford it; it’s pre approved!
Credit card companies often send pre-approved credit card offers to consumers who are behind on their payments or only making the minimum payment each month. They use this tactic because they know they can make money off you in interest rate, late payment fees, and other charges.
I’ll make the minimum payment every month.
If you only make the minimum payments on your credit card bill each month, it will take you months, or likely years, to get out of debt. Minimum payments usually only cover the interest, or a portion of the interest you owe.
I’ll check my credit score next time I need credit.
You get a free credit report every 12 months. You can obtain your free report from one of the three credit reporting bureaus, Equifax, Experian and TransUnion. Know what your credit score is and how you can improve it before taking out loans or adding an extra credit card to your wallet.
My interest rate won’t change. It said so on the commercial.
Credit card companies that offer zero percent interest or a “fixed” interest rate may have something up their sleeves. Read the fine print on the application or agreement. Most credit card contracts detail a list of reasons for which the company may raise your interest rate. These reasons include late payments on the credit card bill, late payments to other creditors, and other small infractions.
Author Bio: Allison Roberts is a graduate of the University of North Texas Department of Journalism. She has experience in agency and in freelance public relations. Allison currently writes for Credit Solutions and she is completing an unfinished work of her late grandfather. For more articles by Allison on debt consolidation visit Credit Solutions.
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