ArticlesReader.com Menu
Newest Articles
Most Viewed Articles
ArticlesReader.com RSS
Submit Article
Login
Signup
Search the articles

Articles Main Categories
Advice
Animals
Automobiles
Business
Career
Communications
Computer Programming
Computers
Entertainment
Environment
Family
Fashion
Finance
Food
Health & Medical
Home & Garden
Humor
Internet Business
Internet Marketing
Legal
Leisure & Recreation
Marketing
Other
Politics
Reference & Education
Religion
Self Improvement
Sports
Technology & Science
Travel
Writing
Subscribe
Receive alert message from us when new articles submitted to our site for free.

Enter your name

Enter your email

Syndicate

















Related Products
Home::Credit

Avoid Payment Holidays When Offered

Author : Jay Jackson
Once you’ve been paying off a credit card for a while you might be offered a ‘payment holiday.' You’ll get a letter stating that since the company knows it’s difficult for some families around Christmas they’re offering you a month off from paying as a ‘special present.'



Why Would They Do That?



Offers of payment holidays typically have a very high acceptance rate. People think it’s great that they can take a month off from the stress of paying back debt. What they don’t usually realize is that these ‘holidays’ aren’t a present at all. They’re a great money-spinner for the credit card company. For the company it’s a win-win situation. They get to make big profits just by making their poorer customers happy.



How Can Letting Me Off Paying Earn Them Money?



That's the trick. If you read the small print youÂ’ll find that the payment holiday isnÂ’t interest free! YouÂ’re still being charged interest. And, since youÂ’re not paying anything back that month the interest will be there next month for you to pay interest on - called compound interest.



This is interest paid on interest. That might feel a little hard to grasp, so hereÂ’s an example. LetÂ’s say you were paying back $1000 of debt at 1.5% per month, about 19.5% per year. Your minimum payment each month is 2% or 26.82% per year.



If you pay the minimum for all 12 months of the year, then you will pay back $233.51 and owe $941.62 at the end of the year. Your debt has been reduced by $58.38 and youÂ’ve lost $175.13 in interest.



With the payment holiday though, you pay 2% per month for only 11 months. So, you pay 24.3% back on the debt over the year. ThatÂ’s $217.80, and youÂ’d owe $960.55 at the end of the year. Overall, youÂ’ve paid $37.86 for your payment holiday from a payment of about $20. In other words, your month off cost you almost two months of payments!



Don’t worry if you don’t understand all the math. It’s been deliberately designed by mathematicians and marketers to be as confusing as possible, to stop you working out what a bad deal you’re getting. Just remember, don’t fall for it. The more you owe the more that ‘holiday’ will cost you.



If It Sounds Too Good to Be True



Anytime they offer you anything, itÂ’s because theyÂ’re going to make a profit on it. If you canÂ’t see where their profit is coming from, be suspicious.


Article Source: http://www.articledashboard.com





Jay Jackson writes extensively on eliminating your credit card debt from your life nad being free from debt burden. More tips, articles, resources and information are on his advice website: www.bustcreditcarddebt.com





Spam emails More free articles

Related articles


  1. How Do I Establish A Good Line of Credit?
  2. A Debt Mentality
  3. Are You Worried About Credit Card Debt
  4. Say Cheese
  5. Better the Devil You Know
  6. Paying your credit card on time
  7. Did Your Credit Score Today?
  8. Free Credit Reports: Get Yours Today!
  9. Your Consumer Rights
  10. Building Good Business Credit After Bad Credit
  11. Online, Phone, U.S. Mail or In-Person: Where is Your Credit Card and Personal Identify Safest?
  12. How To Boost Your Credit Score
  13. Balance Transfers Can Help You Stop Putting Money Down The Drain!
  14. Shoppers Beware - 'Tis The Season
  15. New Law Provides Free Annual Credit Report
  16. Everything You Always Wanted To Know About Your Credit Report
  17. Tired Of Being Broke?...Learn How To Force Banks To Give You Money!
  18. Ways to Look Good without Selling Your Soul to the Credit Card Sharks
  19. Credit Report And Correction Techniques
  20. Ten Steps To Building A Good Credit History
  21. First Major Regulatory and Legislative Victory of 2005 for Creditors and Consumers
  22. When You Are Eligible For A Free Credit Report
  23. 10 Ways To Protect Your Financial Identity Being Used For Someone Else’s Shopping Spree
  24. Credit Cards, Merchant Accounts, and Your Bottomline
  25. Fun with Credit Cards
More related feeds
Re: What's a fair wage for a cleaner/cleaner wanted?
Handing £8ph to someone as a "freelance" payment, no statutory holiday pay, no sick pay, no employer's NI, means you are in reality paying well under the minimum wage, held to be the lowest point at which a person can live decently. ...

Self Employed Loans ? by Lenders Who Do Not See Self Employment in ...
Payment holidays form another important feature of self employed loans. A payment holiday is when borrowers take complete off from making payments. This is when borrowers’ finances see a bad turn or when the borrower has other important ...

UK travel companies show keenness towards mobile-friendly websites ...
Therefore one of her great joys as we sailed around the world, was that being in our own boat, Dolphin Spirit, granted her to carry her own toilet along, and avoid using ones that did not meet her exacting standards.nnI look at it ...

New Air Regulations To Improve Travel For Blind And Partially ...
This must include the special requirements of training staff in the needs of blind and partially sighted people, which should include guiding a blind person, making sure that a wheelchair is not offered as an automatic help but only ...

A parent’s job description
While no health or dental insurance, no pension, no tuition reimbursement, no paid holidays and no stock options are offered; this job supplies limitless opportunities for personal growth and free hugs and kisses for life if you play ...

Use Homeowner Personal Loans to Finance Your Needs the Secured Way
Homeowners get payment holidays and discounted rates of interest during periods of financial depression. Homeowner personal loans, despite the advantages that it allows its borrowers to have, do have to be used with prudence. ...

Does Bad Credit Affect Applications For Mortgages?
Different lenders operate different policies and it is worth ’shopping’ around to see if they offer facilities to pay more when finances allow, or even so-called ‘payment holidays’. As the credit score is based on ever-fluctuating ...

Are You Ready For Holiday Shopping This Year?
Debt management plans offered by DMCC help consumers relieve the stress of excessive debt by reducing credit card interest rates, consolidating and lowering monthly payments, and stopping collection calls and late fees. ...

I Blame It On The Americans-Credit Crunch Is All Their Fault.
You look through both credit records both are similar, both have a couple of late payments, Bill has one missed mortgage payment 8 months ago but this has subsequently been ‘satisfied’ and a note accompanies the application and his ...

E: ? Win a 10-night family holiday with Siblu
A Dover to Calais return ferry crossing is included and suitable payment must be included if an alternative ferry crossing or motorail is required. No cash alternative is available and the holiday can only be claimed in the time period ...

 


 

© 2007 articlesreader.com - All Rights Reserved