Your Overjoyed To Have Your Credit Line Raised BY The Bank But Beware – The Bank Is Even Happier

Banks want you to enjoy the advantages of paying with credit, debit, check and cash”because it will make you more likely to lose track of your money.

Banks are in business to make money and one of the best ways for them to do that is to count on you to lose track of how much money you have with them. Then you’re more likely to overdraft and get charged large fees. There are ways to keep that from happening if you want to.

This can be called the Bank “Money Machine”

As your credit card balance goes up and up the interest you pay each month also goes up and up. Many times the minimum payment does not even cover the interest payment for that month so next month you pay interest, on the interest they already charged you. If you err and go over your assigned limit most times they will approve the charge, raise your limit, and just charge you an additional “overlimit” fee for the month.

Another way that they make money is through loans that they may have out to people. When they are late paying their bills, they make money on the late fees that they may charge. These can be a lot more than people think and can amount to a lot of money in the long run. These banks then make money for the payment being late.

The Banks Continue to Encourage You to Use These Methods.

Most bank fees are set at loansharking rates. They cover your $50 overdraft, and then charge you a $25-35 fee (50%+) to do so. If you are a few days late with a payment there is normally a 10% charge. That is 10% for say 10 days – i.e. 30% per month/360% per year!! When they do “cover” your overdraft remember they are not using their money to pay your check, but the money sitting in other depositors accounts which oft times the depositors receive no interest on, or if they do it is 2-4% per year.

The banks have also taken to charge fees to actually get many of their cards. American Express for instance has yearly fees on their cards of up to $2500. This for their Centurion Card which they justify with the extra services offered with the card. Think of it this way – you pay a fee to have the privilege of charging things on the card and paying them back monthly. Remember when you charge on their card AMEX withholds about 3.2% from the amount that actually goes to the vendor you purchased from. This means they get 3.2% per month, or 38.4% per year, on their credit card money. As to the extra services of travel consultants, etc., now you are paying for using their travel service (they make a commission), and charging again on their card – they again make a fee. Not a bad racket!!

We should all watch what and when we spend any money – cash, check, or card. There should be a point during the month that we just stop because we know now it becomes borrowed money we will be living on. Remember, that borrowed money must be repaid and if you resign yourself to doing this over several years the $1 you spent may become $4-5 you have to pay back. Unless your income is rapidly growing this repayment plan will eventually impact your lifestyle. The buy-now, pay-later, attitude will catch up with everyone eventually.

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