On television, credit cards seem so convenient and consequence-free — just use your card and get “points, “rewards” or “perks.”
But what these commercials don’t tell the consumer is that along with the perks, rewards or points system are hidden fees and high interest rates that can escalate on a sliding scale through no fault of the consumer. Built-in rate hikes can add as much as 25 percent to the purchase price without the cardholder knowing it.
It’s lending practices like these that make credit card companies so much money. It’s why they can afford lavish marketing budgets and high-profile actors and celebrities trying to sell consumers on their cards. But it’s also why people throughout the state and nation are struggling with credit card debt. These practices have driven many to seek shelter in Louisville bankruptcy laws.
Louisville bankruptcy lawyers have helped countless consumers who are unemployed, downtrodden and looking for answers and help. Bankruptcy laws were created with the consumer in mind. They allow people to discharge mounds of debt that are hounding them and give them a brighter future without creditors calling constantly.
A recent column looks at the nine myths of credit card usage and how to bust them:
Good credit requires a credit card
A credit score isn’t built on how much a credit card is used alone. Credit histories take into consideration a lot of spending behaviors, including whether loans are repaid on time.
Credit card debt should be carried
Some people believe this and borrow well beyond their means, which can cause major problems. When fees and interest builds after falling behind on payments, people may not be able to pay it, driving down their credit score.
Paying the minimum will pay off debt
Sure, after you’ve ended up paying many times more for your purchases than the sticker price. At the rate that the interest is multiplied and carried out against consumers, it can take years and sometimes decades for everything to be paid off. Thousands of dollars in debt can turn into tens of thousands or hundreds of thousands of dollars after interest and fees are applied.
Creditors can’t repossess items bought with an unsecured card
A default on a credit card can be devastating to your credit score, whether you keep the defaulted possessions or not
Credit card accounts that are inactive should be closed
Not necessarily. If you believe you can’t resist the urge to use an active line of credit, then maybe. But if you can keep a line of credit open with a zero balance, it shows you don’t rush to use the credit you have.
It’s OK to go over the credit limit as long as it’s paid before the due date
This can hurt your credit score, cost you fees and increase that card’s interest rate.
Even if I overuse my credit card, it will die with me
Not true. Credit card companies can go after survivors and the assets you leave behind to get their money back. Your spouse, if he or she survives you and shares a credit card, will be saddled with the debt.
I wouldn’t get so many credit card offers if I couldn’t afford it
Credit card companies send out offers to just about anyone — even dead people and children. Don’t feel so special. Their plan is to get as many people signed up for their cards as possible and likely only do a cursory look at your credit score before sending you mail.
Bankruptcy is the only option if my credit card debt is massive
There are many solutions to high credit card debt, though Louisville bankruptcy may be your best option. Just beware of credit counselors and other programs that may not end up helping you in the long run.