Step 1: Understanding the “0%” Trap
Credit card companies bank on a lot of things happening to make their money–not the least of which is that people pay back their loans very slowly.
The credit companies know and have been proven right time and time again that most people don’t pay off their balance every month. In fact, an overwhelming majority of consumers only pay the minimum payment. This is crazy if you ever done the math behind the “minimum payment” scam. An item you buy for $1,000 can end up costing several thousand if you just pay the minimum monthly payment or slightly above. This has the lenders licking their chops and banking free money every month. The credit card companies have such faith in the consumers’ “payback as little as possible” mentality that they are willing to give money away for 12 to 15 months without charging any interest. Visa, Mastercard, American Express and Discover all have multiple cards that boast 0% interest on all purchases made for the first 12 to 15 months that you own the card. And yes, this is actually true! They will honor this promise as long as you at least pay the minimum monthly payment on time–YOU WILL NOT BE CHARGED INTEREST for the promotional term.
Remember, the Visas and Master Cards of the world are not giving you this year of no interest because they like you and want to see you prosper. They are betting on the fact that you won’t pay this loan back by the end of 12 months and then…whammo!!!! You get hit with all the back fees and back interest that has been silently accruing for 12 to 15 months. Furthermore, you’ll get charged usurious interest fees for every month the card has a balance once the promotional period ends.
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