Penny Seeds

While it seems like a good deal you really might be doing yourself more harm than good to get a lower rate. A high interest rate can cost you lots of cash every month, but a lower one might cost you more in the long term.

Credit card companies are getting all kinds of hell rained down on them for their recent rate hiking actions. People are furious that they’re rates are being  jacked up sometimes three times what they were for no reason. Guess what! They don’t need a reason to raise your rate.

If you’re constantly late, over limit, ect. that might give them the heads up that they need to raise your rate to get rid of you or suck out some more cash because you’re a ‘higher liability’, but they can do it anytime!

Many people are calling their issuer to get a lower rate, and I thought about that for a few minutes before I decided it was pointless! If I was guaranteed that lower rate for any amount of time; then yes it would be a great plan for me! If I had thousands upon thousands of dollars of debt I could potentially save a lot of money.

However, the fact is they could raise it double next month if they wanted to do so. That doesn’t seem very secure to me, and it could be very dangerous for you. The less something has a financial impact on you the more trivial it becomes in your mind, but imagine this scenario.

Let’s say you have an unattractive rate of 18% on your current card. You call up your credit card company, and spend a good hour complaining until they knock you down to a 12% rate to get you off the phone. Great! You think to yourself, and proceed to hand out your plastic to ever retailer in town.

A couple months later your card issuers sees that you have acquired a good amount of debt thanks to your lower rate, and decide to put you up in to a 25% interest rate. This number sounds unreasonable, but it’s not an exaggeration. I recently went to a rate comparison site, and one of the ‘comparable’ rates was a card with a whopping 39% interest rate on it! That’s the ‘low’ one they were advertising - So imagine what they charge some people!

I decided that having a lower interest rate would just encourage me to keep money on my cards, and that’s not what they’re for! I keep credit cards around to boost my rating, and for emergencies. (Car repairs, ect.)

Ultimately you want zero dollars on your credit card. That means no interest money for greedy creditors; so who cares if they up my rate to 75%? I just won’t give them any money.

Instead of a getting a better rate to keep yourself in debt - Spend that time shopping around for bigger returns on your savings, CDs, stocks,  retirement fund, ect.

If you owe a lot of money already go ahead, and get the best rate you can, but don’t slack! Pay that balance off as fast as you can. Spending money that isn’t yours is dangerous - And millions of people are in trouble because of it. Keep your cards to..

*Raise your credit score.

*For emergencies

*Rewards programs (But pay it off before you owe more than you bought!)

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