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Deceptive Credit Card Debt - It Might Not Be Your Fault Blog Feature

By: America's Credit Union on October 24th, 2019

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Deceptive Credit Card Debt - It Might Not Be Your Fault

Credit Cards | Budgeting

Big credit card corporations spend an enormous amount of time and energy marketing their products in ways that seem cost-effective to consumers. Offers such as promotional discounts, rewards, zero-interest balance transfers, and even cash-back appear to be an excellent way to gain a benefit. But too often, everyday people get tripped up and have a monthly balance you can’t quite pay off. It’s important for consumers to be wary of rising credit card debt that may result from your excitement about taking advantage of perks.

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Credit Card Debt Because of Promotions

Credit card companies roll out promotions having already done the math on profitability. The abundance of rewards and even cash-back programs often get consumers focused on the benefits. But what happens is that you start to outspend your means.

If you are not careful about spending to gain frequent flyer miles, gas points, and other promotional perks, credit card debt may exceed what you can pay off at the end of the month. Once you enjoy the positive feeling from the rewards, it’s likely that your balances will swell and monthly interest costs with them. It’s essential to avoid getting caught up in exciting promotions.

Credit Card Debt Because of Introductory Rates

Special deal signIt only stands to reason that credit card companies must turn a profit to stay in business. That’s an important idea to keep in mind when marketing campaigns prompt you into accepting a credit card you don’t need.

The low introductory rates may seem like a solution to your interest problems. But the issue that trips up otherwise savvy cardholders is that introductory rates usually run 6-12 months at zero interest on certain items. In many cases, those are only balance transfers. The rub is that if you had the cash to painlessly pay off the balance, wouldn’t you have done it already?

Taking these zero-percent introductory rates may be driven by your anxiety about squandering money on excessive interest. The big problem is that too many people who go down this path don’t pay off the balance before the promotion runs out. And, it’s not uncommon to be worse off financially after the fact.

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Credit Card Debt Because of Adjustable Rate Cards

When hard-working people encounter an adjustable-rate credit card, it’s imperative to understand when and how much the rate could creep up. These products can be useful while rates are low. But as they suddenly ramp up, you could be surprised by unexpected credit card debt. These types of cards can be risky, and unless you have genuinely savvy accounting skills, fixed-rate products might be financially safer.


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Credit Card Fees Contribute to Overall Debt

There are plenty of ways that cardholders get blindsided by escalating interest payments on swelling balances. But hidden fees can also be incredibly troublesome. It seems like just when you come up with a plan to start paying down that balance, the fees cause it to tick back up. These rank among the most frustrating.

  • Late Payment Fees
  • Balance Transfer Fees
  • Annual Fees
  • Foreign Transactions Fees
  • Cash Advance Fees

About 42 percent of American households carry monthly credit card debt. That means nearly half the country exceeds its monthly means to pay off debt and end up paying interest and fees. There simply has to be a viable solution to get free of burdensome credit card debt.


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How to Pay Off Credit Card Debt

If you are struggling with credit card debt despite your best efforts to pay down balances and want to avoid wasting your hard-earned money on interest and fees, it’s time to try a different approach. You may want to consider an ACU Signature Loan to consolidate all those debts. Making the move to a fixed-rate Signature Loan can take those multiple credit cards out of the mix and leave you with just a single manageable monthly payment. There won’t be any surprise rate increases, and it’s a great way for you to save money. Also, consider keeping only those cards that fit your emergency needs.

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Membership in America’s Credit Union is open to anyone who lives or works in Dallas, Rockwall or Collin Counties, Texas, and their family members. Employees of select employers may also be eligible. See our Membership page for details.