FNTN

Introduction.

If you’ve ever felt that you’re being ripped off over credit card payments – you’re probably correct! Many credit card users are unfairly being made to pay over the odds on their credit cards because the card companies insist that any repayments you make go to pay off low interest rate debts first, leaving the higher interest rate debts to carry on accruing more and more interest – meaning that you have to keep paying more and more to the credit card payments.

A typical credit card scam.

Everyone loves a deal and being offered 0% interest on credit card balance transfers is always a tempting one. These can be great deals – providing you don’t start to spend further money on the credit card, in which case it actually becomes somewhat of a credit card scam, perpetrated by the credit card companies! Consider this simple example; you transfer a $3000 balance to a new credit card at 0% interest, knowing you can repay that within say 6 or 12 months. But, then spend a further $2000 on it at an annual 20% interest. Every time you make a repayment you’ll only be reducing the original $3000 debt, meanwhile the new debt is rising $400 the first year, $480 the second and so on.

The government to the rescue.

Perhaps one answer to not overspending on a credit card is not being able to carry one?

 The procedure above and employed by the credit card companies is known as adverse order of payment or negative order of payment. The good news for anyone with a credit card debt problem like this – is that next year legislation will come into force in the US making credit card companies change from negative OP to positive OP; ensuring that high interest rate debts get paid off before lower ones. However, if you can’t wait until then there is another way around this credit card scam. If you do use a 0% interest rate balance transfer, do not use that credit card for other purchases; look for another low interest rate credit card for your all of your other purchases.