It is not a secret how Canadians love to shop using their credit cards. Whether its debit or credit, it doesn’t make a difference for as long as it’s a card and is accepted by all business establishments. If you’re the type of person who knows how to control spending habits then there’s no problem at all. The reality though, is that many of us love to spend without dwelling much on the repercussions of acquiring material things through debt.
In their subtle ways, these financial institutions are pretty assertive in going after their customer’s money. Despite this, most card users do not pay much attention to these matters. One third of Canadian credit card holders aren’t able to pay banks in the interest-free period. This results in penalties like higher interest rates. At present, $50 billion is charged to Canadians due to the growth of interest due to credit card debt.
Lending firms have become more vigorous in luring potential customers, as well. Some promotions are clever baits. When a company offers a low interest rate to encourage customers to move their credit balance to another financial institution, this rate doesn’t usually last. Let’s say it will only last for six months. After that, a much higher rate will be imposed. Another scenario might be when the rate is kept low but as soon as the customer gets delayed in payment, it suddenly shoots up. Also, customers can be penalized to carry the additional interest for months when they are late in payment.
Credit card companies are also at liberty to increase their customer’s spending limit without having to ask them. If the customer is not careful, he or she might run the debt so high that it would take him or her years to pay the principal and interest. It always pays to double check all financial activity whether it comes from your end or the bank’s. In peak spending seasons, like the holidays, it is common to receive cash vouchers from these companies. However, this isn’t free. When these vouchers are cashed, they automatically become debt which will be added to your credit card. Most customers end up spending more than what they intended to. V:13
Delayed payment incurs penalty, always. If you neglect to pay off the credit card balance in the allotted grace period, chances are all your purchases for the next two months will be charged with the higher interest. Some companies will also raise your credit limit without asking customers. People keep on spending thinking that they are still way below their limit, when in fact there is already a new one that is higher. Time and again, the customers unwittingly borrow more than they can afford.
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