Monday, July 7, 2008
Credit Cards good and evil
Most of the money I owe is to credit card companies, which here are banks. I've had credit cards since I was 18 (an additional one from my parents). As I grew older I got my own card. First it was a regular card, then silver, then gold and now it's a platinum. I got into credit cards with the old saying that I would use it for emergencies only. Well, the term got a broader meaning than expected. Soon it was regular purchases that became "emergencies".
Along the years i've also accepted other cards for reasons that seemed logical at the time. One for grocery shopping that would give me discounts and points. Another one set to autopay my utility bills and get points for that too. In the end those were more excuses that I made myself than actual reasons to have them. The last one I got really did help me with my finances as it registered me for a group cellphone plan that cut my cellphone bills (mine, wife and oldest daughter) almost in half. Plus now we have free calling between us and most of my family members, since most of them have the same card.
In total I think I owe anywhere between $20,000 to $30,000 to credit card companies. Some i've already managed to cancel the cards and put the balance on payment plans. Still it's a lot of money to pay and I will be stuck paying it for at least 36 months on one and 48 months on the other one.
One thing you have to know by now is that in my country, Honduras, credit cards interest rates are HIGH. it's common for them to charge anywhere from 4% to 6% monthly! That's 48% to 72% yearly! so even if you pay the minimum balance, if you keep using your credit cards by the end of the year you will owe more and more and more and it will mostly be interests.
Before recent regulation, Credit card companies would calculate interest on the bulk of your balance, which already included interests from last month...talk about a good scam. It's not supposed to be that way and the calculations are supposed to be simpler now but I haven't checked them, I just want to get out of it!!
It would be easy for me to blame the credit cards for my current situation but in all honesty I was the one that signed the documents. I was the one that used the cards (well my wife too..in a big part but that will be another post). So I can't really say that I was fooled. I think that I just slid so slowly into debt that when I figured out that I couldn't pay my credit cards and keep a low or no balance over to next month it was too late and I was already in a vicious cycle.
Most of this year i've had credit card collectors call me every month from every one of my cards, and it's such a bad feeling to get those calls. I will tell you later how i got some of them to stop.
I'm sending a picture of my credit cards and I hope it will post correctly. You'll notice some of them i carved out a V from the magnetic stripe. This is a last-ditch attempt of me to stop using them even if I had to so I wouldn't have a choice.
What do you think about credit cards? is it the cards that are evil or is it the credit card holder?