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Beware the Helpful Credit Pusher

Heard the ad about the credit card company offering to round your purchase up to the nearest dollar and open a savings account for you? How many have decided to go with that credit card? How many want that super easy way to save? Now, how many have figured out it's an amazing way for the credit card company to make a bundle off your 'savings'?

Two things to remember: Credit card companies are out to make money, not to give it to the consumers and interest rates keep rising.

Consider if a purchase for $10.73 is rounded up to the nearest dollar. The charge to the card is $11, not $10.73. Interest, finance charges and any other charge from the credit card will be figured on the higher amount. Instead of twenty-seven cents saved for the card holder, figure anywhere from 19% to 30% of the twenty-seven cents going right into the credit card company's waiting hands. The savings drops to eighteen cents in the best case scenario. Figure that the card never gets paid off in full. That means the 'savings' is paying out more interest and more finance charges, until the consumer is paying several times the 'savings' the helpful credit card company is putting aside. Multiply even this small amount by hundreds of thousands of users and it comes out to a nice profit for the card company. Oh, the interest you'll be getting on the savings, it comes out to maybe 4%, if you're lucky.

Always remember, if it sounds too good to be true, then somebody's lying. Check out the facts and figures.

How often does a cashier offer ten percent off if a customer signs up for the company credit card? Ten percent off sounds pretty good until the small print is considered. That's where the massive interest rate is located - at least double, sometimes triple the discount. And again, if the full amount is never paid off, it costs even more.

Should a person never get a credit card? No, that's not what I'm saying. The best way to use credit cards is never get one that has a higher amount than can be paid off in under thirty days. Interest and finance charges can be avoided. If your top payment is $100, get one for $100 and do not let the credit card company decide when your amount should go up. That should be the individual's decision.

Today Americans are buried under easy credit. Many are losing their homes, finding their families broken up, and watching their dreams fade into the reality of debt. The only safe use of a credit card is when the consumer is in control of the card, not when the card is in control of the consumer.

Learn more about this author, Michelle N. Broughton.
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