You're at Their Mercy
from daveramsey.com on 02 May 2008
Earlier this year, Bank of America told many of its cardholders that their interest rates were going up. Not just a percentage point, either; rates went up from 9% to more than three times that!
There was a lot of fuss made about it because the people who saw their rates shoot through the roof weren't late on their payments. They didn't even have bad payment histories. They were regular customers who made payments on time each month. Bank of America called it their periodic review of customer credit risk.
Since they are in charge of the rates, they can make them just about anything they want, for whatever reason they want. Bad credit? Pump up the rates! Bad breath? Make 'em higher! Sister didn't go to the senior prom? That's worth another few points!
It may not be fair, but it's not about being fair. It's about the plastic companies making money off of you, and every time you buy something using their cards, you help make that happen. When you do business with credit card companies, you are at their mercy.
There is a way to buy things that doesn't involve high interest rates. It doesn't involve late payments, rude collectors, or trying to beat the system so you can get reward points. It is simple, you know what your limits are, and is so easy a child could do it. It's called paying with cash.
When you try to play the system, you end up creating lots of stress for yourself that you wouldn't have if you did things the simple way. By the time you earn your "reward" (if it happens), what you have gone through makes it not worth the trouble. Don't do that to yourself. Use cash and keep things easy. It will keep the stress out of your life, and the smile that you'll have will be worth more than the airline miles you don't have.
Say no to credit! Get started now by downloading Dave's free budgeting forms.