Are You Being Sucked into the Credit Card Debt Trap?

Every week, countless Americans wake up and find themselves in the midst of a cleverly laid financial trap called credit card debt. It happens so subtly, most people never see it coming; that is until it's too late. The next thing they know, they're receiving scary debt collection letters and calls from gung-ho debt collectors, threatening to freeze their bank accounts, garnish their wages and otherwise take them to debtor's court. For some people, the pressure from the credit card debt becomes unbearable, forcing them to consider amongst other things, bankruptcy. No matter where you are in terms of credit cards and debt, you had better learn the credit card debt traps and most importantly, don't get caught in them.

The Minimum Payment Trap

Some people observe the minimum payment on their credit card statement and view it as a Godsend. Nothing is further from the truth! If you fall into the option of the minimum payment trap, it some cases it could take you nearly thirty years to pay off a credit card. Let's say that your balance is $7500.00 with a 19.21% interest rate and you are making a monthly payment of $121.00. It would take you approximately 24 years to pay off that credit card. If that's not a trap, I don't know what is.

The Ridiculous Fee Trap

Ever taken the credit card debt trap test? This is a test I devised to help people comprehend what they were signing up for when they got approved for and accepted virtually any credit card. Part of that test quizzes you on the fees credit card companies charge you. Most people don't learn about these fees until after they are hit with them. But it is important to note: all credit card companies have these fees; read the very fine small print in your disclosure and you'll find them carefully hidden in there. These companies literally make billions of dollars every year on outrageous fees and surcharges.

Annual Fees: $19.00 to $75.00 and up

Identity Theft Prevention Programs: $7.95 and up per month

Fast Card Fees: $15.00 to $20.00 per incident

Front End Finance Charges: $5.00 to $100.00's per year

Late Charge Fees: $19.00 to $39.00 per incident

Membership Fees: $10.00 to $79.00 and up per year

Ongoing Interest Charges: $100.00's to $1,000.00's per year

Over The Limit Charges: $10.00 to $59.00 per incident

Pay By Phone Charges: $5.00 to $19.00 per payment

Payment Protection Programs: $29.00 to $100.00's monthly

Return Check Fees: $29.00 to $39.00 per check

The Increasing Interest Trap

If you haven't noticed, credit card companies have a rulebook that changes at their whim. In their rulebook, (written by, approved and sanctioned by them) they have the right to arbitrarily raise your interest rate without cause. Case in point, in November of 2008 Citigroup announced they would be raising credit card rates by 2 to 3 percent on millions of customers that haven't had an increase in the last two years. They claimed they had to do this because of a difficult environment. Remember, credit card companies write their own rulebooks and when you accept their credit cards, you essentially agree to be SLAMMED with little or no notice!

The Late Payment Trap

If you fail to make your monthly payment on time by the due date, the credit card company automatically assesses you a late charge, plus additional interest. You need to know; they love it when people pay late. Late payment fees are another one of their great income streams.

The Teaser Rate Trap

The credit card companies can't make a dime unless they get people to take on credit card debt. One ingenious tactic they use to lure customers is by offering a teaser rate of 0% interest rate for 12 to 15 months. Its amazing how many people take the bait and bite on the too good to be true interest rate. Very few people take the time to read their disclosure. Those teaser rates come with some pretty tough conditions. 1. You can never have a late payment. 2. Your income to debt to income ratio must remain within that company's guidelines. 3. The economy has to remain stable. 4. You can't apply for too many other credit cards or lines of credit. 5. You can never miss a payment. Make any of these missteps and BAM, your 0% interest can quickly become 15.99%, 19.50% or higher! As you can see, getting sucked into the credit card debt trap has its consequences. The truth be told, you can live without credit card debt by simply changing your spending habits.