Have you been offered a zero percent credit card or a balance transfer deal on an existing credit card? It’s tempting isn’t it?
Credit card companies know that most people will find something they can justify buying now on credit and fully intend to clear the balance before the end of the 0% interest term.
Other common “teasers” to loosen your spending include a cash bonus if you spend a certain amount of money on your credit card within a specified time, or generous discounts on goods from a specific retailer.
Of course, credit card companies are also in the business of making money and they do this by charging interest. So how can they offer these too-good-to-be-true deals and still stay in the business?
The answer is in the name “teaser” loans. Credit card companies know all too well that few people can resist what appears to be “free” money, but the majority will not be able to clear the amount owing before the real interest rate kicks in, and it will be high.
Even then, you probably aren’t worried. After all, what’s a couple of months interest when you’ve had X months free? And that’s how spiralling credit card debt sucks you in.
A change of personal circumstances, loss of a job or an unexpected expense can tip you over the edge from “just managing” to sinking in the mire of accrued interest, late fees and other credit card costs.
For many, even the minimum payment becomes too much and they end up with a CCJ, loss of property or even bankruptcy.
The Problem with Teaser Loans
There are a couple of issues to be aware of with credit cards offers. Firstly, balance transfers from another credit card usually attract a fee, either a fixed amount or 5%, which is added to what you already owe.
Secondly, when you sign up for that tempting 0% initial offer, you probably don’t bother reading the small print. Hey – the future interest rate is irrelevant if you’re going to pay it off when the 0% ends, right?
Teaser credit cards typically have interest that is on the higher end. While most credit card companies charge around 16-19%, teaser cards can be in the 25-49% bracket. Read the terms carefully and make sure you know the penalty before you sign up.
If you do succumb to a teaser loan, put the money away each month ready for the day of reckoning, so you know you can clear the outstanding amount before the high interest kicks in.
But what if all this information has come a bit too late and you’re now struggling with massive credit card debt you can’t ever hope to repay. What then?
Aunt Meg is on hand and understands your problem exactly. We offer debt counselling and can negotiate with credit card providers on your behalf if you genuinely can’t meet the payments.
Don’t put up with threatening letters, endless worry and sleepless nights any longer. We can help you negotiate lower interest and better terms so you can sort out your debts in the best and most affordable way.
Contact us today for a chat and see how we can work our magic!